Once you have reached a point where you are confident to commence trading, you need to find the most suitable broker from the multitude of forex brokers out there. You must bear in mind that they make their money from your money, regardless of whether you are showing a profit or a loss.
The first step in your selection is to determine whether you are going to choose a market maker or an Electronic Communications Network broker. Many market makers are considered to be untrustworthy. This is because they often artificially manipulate spreads to fill their pockets. Honest market makers are quite happy to earn their income from the spread on the purchase and sale price of a pair.
ECN brokers will normally charge you a commission-based fee, but they do not earn anything from the spread of the pair. This gives them no logical reason to manipulate spreads. Before you make your final choice of forex broker, you should read the fine print of the contract to ensure that you know exactly what you are getting into.
Do not rush your choice of one of the forex brokers. You should make use of the demo accounts that are available on most broker sites. This will allow you to test their trading platform and determine if it is suitable for you, based on your strategies and style of trading. Once you have found a trading platform that suits you, you could opt for that broker. There are a few factors you have to take into consideration before you continue.
Forex Brokers Fees
The main factors you should consider are the funding options of the broker, the withdrawal options and whether the broker has an excellent reputation. Check to see if there are any additional fees applicable to any of your actions on the site. Many traders have experienced difficulty in withdrawing funds with some brokers. It seems to take a much longer period to withdraw funds than to deposit funds. You should go to online forums and check other trader’s experiences related to the withdrawal and deposit of funds. You need to check if your potential broker is licensed and if the firm is regulated and if so, who the specific regulatory governing bodies are.
If your intention is to become a day trader, you will not be affected by interest rates. If your intention is to do longer-term trades, you may be liable for an interest charge by your broker. Some of the other fees that a broker may charge include margin rates, bank transaction fees and routing fees. Ensure that you are aware of these other charges.
If you have experience in the forex market, you are probably aware of the various types of trading platforms on the market. In fact, you may have some experience in using the more popular ones. Some forex brokers offer their own software for trading. You should try different software platforms before you make your final decision.
Forex Broker Support
You have to find out the level of support the brokerage will offer you. If you are a trader who works outside of the normal business hours in your region, you need to be assured that you are offered access to your broker during the times you trade.