Forex Brokers Introduction
Once you have made the decision to enter the foreign exchange currency market, you will need to find a suitable market maker to trade with. Some of them are large brokerages, some have tight spreads and some offer you more services and analysis tools. Each one has something to offer you, but the decision is yours and you need to know the questions you need answered before making your choice.
Finding Forex Brokers
All forex brokers have their advantages and disadvantages. You have to decide what is important to you regarding your trading style and strategies. Here are some of the questions you need answered before you go ahead and choose one.
- Is the forex broker regulated?
- If the broker is regulated, in how many countries is it regulated?
- Where is the broker incorporated?
- Is the broker incorporated in a country like the UK or US, or offshore?
- What is the size of the brokerage?
- How many employees does it have?
- What is its level of capital?
- Does the broker offer 24 hour telephone support?
To ensure that you funds are safe and that you have the ability to appeal in the event your broker declares bankruptcy, it is best for you to find a large brokerage regulated in a couple of major countries. The larger brokers have more funds available to ensure that its trading platform and servers are stable. This will ensure that the servers do not crash during high activity periods. You also need to ensure that your broker has enough employees to take calls during busy periods. Ensure that the brokerage is a legitimate trader.
You should check to see which regulatory bodies your broker is registered with and the requirements of the governing bodies. This information is available online. In the US, brokers who are registered as futures commission merchants have to meet with strict financial requirements. They have to show that they have sufficient capital and have to submit financial reports to the regulators. If your broker is registered with the Commodity Futures Trading Commission which is an independent US government agency, you will be able to access all registered merchants’ up to date financial statements.
An added advantage of dealing with a merchant who is registered is the transparency of their regular business practices. Records of all proceedings against merchants are kept on file by the National Futures Association. This allows you to find out if the broker has had any complaints filed against them by regulators or clients.
If you are uncertain about the choice of broker, you should speak to acquaintances, family or friends about recommending a suitable broker. Go online and visit the broker’s website to see if they have posted any personal recommendations. It is possible to join foreign exchange forums and groups where you will have the opportunity to find out who other traders are using. This also gives you the chance to find out more detailed information, such as the leverage and trading platforms that are being offered.
It is important you find a broker who is trustworthy, reliable and offers you the services that you personally require.