An important task when trading on the forex market is that of finding a forex broker. This is not always simple, particularly for the new trader, and must be well thought out. Firstly, each forex broker specialises in a different type of forex trading. This means that different forex brokers will target different trades. It is also imperative that a trader register with a broker who suits his requirements. In order to find this ideal broker you must engage in a great amount of detailed research. In addition to understanding the different features of a broker’s service the policies and level of support must be scrutinised finding vital factors in the trader/broker relationship.
Is bigger better than smaller?
Upon doing research, traders usually discover that the smaller forex brokers are as efficient as the bigger forex brokers. Brokerages all offer the same services and generally conduct business in the same manner. Some traders prefer to register with large brokers as they will have better reputations. Other traders prefer smaller brokers because of the more intimate client relationship. However, it is recommended that a trader employ the services of a mid-range broker. These agencies are usually able to accommodate the amateur traders with minimal capital and continue working with you as your investments increase.
When completing research, traders will discover that smaller forex brokers are as effective as the larger ones. The smaller brokerages generally offer the same services and conduct business in the same manner. In fact, some traders prefer smaller brokers due to the more intimate client-broker relationship. It is generally recommended that a trader employ the services of a mid-range broker. These agencies are generally able to accommodate both the retail trader with minimal capital and continue working with you as your capital increases.
What should I expect from a forex broker?
As has been noted, each forex broker offers a different specialisation thus targeting a different style of trader. However, sometimes this does not refer to the trading style exclusively. A specialisation within a forex brokerage may include anything from the services offered to a low costs feature. It may include a customised customer support service, a mutual fund management feature or real time tools. Below are some of the services which forex brokers may specialise in.
1. The online trading platform
The forex market differs from any other trading market in that it is conducted via telecommunications or online. The online trading platform is the interface on which the traders conduct their international currency trades. When exploring forex brokers, it is important to examine the ease of their trading interface. If one is to utilise this service, it is vitally important that one has a strong understanding of the platform. If a trader does not understand the technical workings of the trading platform, it is highly unlikely he will navigate the market effectively resulting in capital losses. The quality of the trading platform may be determined at the time of registration allowing the trader to change brokers if he is not satisfied.
2. A minimum trading account balance
Many forex brokers do not require a minimum balance in order to register, however some have retained this feature. It is worth checking before registration to ensure you do not incur any unnecessary expenditure.
3. An inactivity fee
An inactivity fee is the amount charged to your account should it show no active trading for a certain period of time. This detail will be noted in the contract when registering and it should be examined closely.
4. Superior customer support
The level of customer support is vital for a trader. It is important to note that one will have effective support if in a state of emergency. To ensure you have a broker with a strong reputation, do research and take the reviews to heart.