Currency trading requires the trader to have a Forex trading broker. There are several factors you need to bear in mind as you choose a trading broker. These factors are vital when selecting a broker who will make you a winner.
Reputation
The first factor is their reputation. Most traders usually overlook this as an obvious quality. To do this you can start by checking on forex forums to have a feel of what other foreign exchange traders have experienced with any specific Forex currency trading broker. This goes along way in giving you an insight into the kind of service a dealer will give you as well as support you in your business. Always select an agent with an impeccable reputation.
Foundation and Legitimacy
The second factor is the foundation and the legitimacy of the currency trading broker. Most dealers are associated or form a part of large financial organizations and commercial banks. Such a foundation means that the dealer has the backing of the institutions and has diverse sources of income apart from foreign exchange business. A legitimate agent has to be registered with a regulatory institution specific to the FX business. Make sure you check up on their financial position to guarantee that your money will be well covered and safe.
Margin
The margin is the amount of money you need to open and maintain any buying and selling position. A margin can be 'used' or 'free'. A margin that is used means the amount that is in use in maintaining a current open trading position. On the other hand a 'free' margin is the available amount which can be used to open a new position. You therefore need to know the margin that is required by a specific dealer. Also, find out if the margin changes when different currency pairs are considered.
Spreads
A spread is normally a difference between the 'ask' price which is the buying price of currency and 'bid' price which is the selling price. These are represented in pips. It is important to know what the forex currency trading broker is offering in terms of spreads. Also check if their spreads are fixed or variable. A dealer can tailor their spreads to cater for specific traders or they can offer the same spreads to all traders.
Limitations
Always select the dealer that will let you get into buying and selling regardless of your original investment. You don't want to force your way to a broker who solely welcomes investments higher than $10,000 if you can just commit $1,000, right? Always take into account the amount of investment that you are prepared to invest, and this will greatly enable you to decide the broker to do business with.
Leverage
This is the term used to determine the quantity of lots you can purchase with your investment. If your dealer offers 100:1 leverage, then you can purchase 100,000 lots for only $1,000. The amount of lots that you have influences the amount that you will be generating in trades, which is why it is important to make sure that you are working with a broker that offers the highest leverage possible.
Help Desk
I believe I do not need to justify the reason why this is important, but just in case, help desk is critical as it will allow you to ask for help whenever you are having difficulties with your account. The support system is generally made up of experts and should be available to help you with the difficulties related to your trading account. Under no circumstances select a dealer without a support service.
Choosing a foreign exchange dealer should be done carefully because they are the people who understand the forex market. Getting a great Forex trading broker is an initial breakthrough in currency trading. It is every trader's wish to become successful in Forex trading.
