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.
Harald Reno is publisher of http://www.ForexWealth4U.com. On his website he provides information on how to select a good Forex currency trading broker. You can also register for FREE Mini-Course on "Forex Trading Tips" to gain rare insight into Forex Trading.
