There has been an increase in interest in trading as a source of income and as a business. Forex Trading (or Currency Trading) is fast becoming one among the most popular forms for investment trading.
There is no capital investment required for entry, so it has been easier for street traders to trade Forex. If you do not work for a large bank, broker services are required in order to trade currencies. Fortunately, as FX trading is becoming more popular, so does the number Forex brokers. With so many brokers available, the problem for Forex traders who want to trade is not knowing how to trade but choosing the right broker to start trading. Unfortunately, not every broker on the market is the same. You need to find the broker that best suits your trading needs. If you are looking a broker you can have a look at Forex Malaysia to find more.
This is the part that can be difficult. Brokers may not offer the same services, or have the same charges and policies. A slight difference in charges, such the pip spread, can have a major impact on your profits.
Forex traders must concentrate on the markets in order to make money. Before you trade, it is essential that you find a reliable Forex currency broker.
There are many elements that make a Forex broker a good trader. Here’s my top 10 list of tips for selecting good currency trading agents.
As there are many “flyby-night” traders in the market, reputation is critical in this business. It’s best to stick with Forex currency trading broker who has a solid track record.
One important thing to keep in mind is that all their business dealings should be verified. Are there satisfied customers in their legitimate office? Are they in business now for many years, or was it an overnight success?
Reviews from brokers are a good source of information. Avoid anyone who has been rippedoff before.
Brokers who are trustworthy should be open about their transactions and operations. So potential traders can quickly find out about their reputations, as well as their performance online, relevant information about brokers must be available.
No matter your location, make sure you select a Forex Broker that operates in a country where regulatory authorities have oversight. Reliable Forex brokers should be regulated by the appropriate authorities.
Swiss banking system, for example, is tightly controlled by the Swiss Federal Department Of Finance. US Forex broker should be an official member of the National Futures Association, (NFA), and registered as a Futures Commission Merchant, (FCM), with the Commodity Futures Trading Commission, (CFTC).
That means they must conform to the industry’s rules and regulations. You do not want an unregulated broker in the middle or nowhere holding on to your money. Good luck getting your money if they go under.
It is possible to pick another broker if a broker does not have the authority of monetary authorities.
3. Pip Spread Differences
Currency trading brokers don’t charge any fees or commissions. Instead, their commission is based on the difference of the pip spread between currency pairs when you trade.
The currency market is not traded through any central exchange like other financial markets. This spread determines the value of your spread.
Forex brokers typically publish live or deferred prices on their websites. This allows traders and brokers to compare spread differences. Some brokers even offer a variable-pip spread.
Due to the volatility of Forex Market, the idea of a variable Spread may seem appealing. If the market is quiet, then the spread is quite small. But, when the market heats, the spread could be large enough that it wipes out your profits.
Many brokers can be referred to as “bucketshops” by some. They might not have your best interests in mind, and some may even manipulate the spreads to suit their own purposes.
The bottom line is to still search for FX brokers offering fixed and low-pip spreads, regardless how the market moves.
4. Execution Speed
This is what I find most novice traders don’t notice when they sign up to trade accounts.
Brokers often publish live prices to their trading platform. The question here is, however, how fast they are able execute the order once it has been clicked on the “Buy” and “Sell” buttons.
The execution speed of your order is critical, especially for scalpers trading the 5 minute charts.
This problem can be solved by opening a demo trading account with the broker to give it a spin. This will give you the opportunity to try out their trading platform and its speed of execution.
5. Minimum Trading Account Size
Broker leverages for small retail traders, who have less capital but want to take part in the Forex action, are becoming more attractive.
Both Nano and Micro accounts are available. However, most brokers offer two types of trading accounts sizes: the Standard account and the Mini account.
The most important difference between Standard and Mini accounts is that Standard accounts can trade in 100,000 units, while Mini accounts can only trade in 10% or 10,000 units per lots.
Also, the mini account offers a fraction of the amount that is available in the regular account. This allows for a tenth of the risk you would take in a regular bank account.