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Here you will find a checklist so that you can find a broker that will maximize your trading experience.
1. Execution Only
Your broker is only there to help you transact your orders and make sure your account runs smoothly – they should NOT give trading recommendations.
Many novice traders think this is a good idea and their broker knows best, however if he could make money trading he wouldn’t be a broker!
Brokers are there to transact orders and that’s all.
If you don’t take responsibility for your trading you won’t win.
2. Look for tight spreads
This is your cost of doing business and the less you pay the more of your profits you get to keep.
Look for spreads from your forex broker of 3 – 5 pips for trading the majors.
There should be no other commissions or fees - make sure the spread is all you pay.
3. Leverage
Look fro leverage of at least 200:1, although many brokers will offer you more and some go as high as 400:1.
4. Trading platform
Check it out and see how useable and reliable it is and that you get 24 hour support, if you need it at anytime for any problems you may encouter - not all brokers offer 24 hour service so beware.
5. Ease of funding and minimum investment
Today, many forex brokers will let you fund an account online with as little as a $100.00.
If you are a novice starting small is a good way to get your feet wet.
These companies also allow small minimum trades.
If there are online payment facilities, you can fund your account quickly and equally get your profits back quickly.
6. Guaranteed stops
If you are a novice trader and worried about the unlimited liability that margin trading presents, you may want to guarantee your stop and there are many brokers who will provide this comfort for a fee.
7. Extras
A forex broker is not there to give you trading advice but it is nice to get extras such as demo accounts, free newsletters, reports and other educational material, which can help you improve your trading – You will find many brokers who offer a lot of extras and if you are new to trading they are well worth having.
Wednesday, November 12, 2008
Forex Brokers - Helping to Maximize Your Success
A Forex broker is a broker dealing in foreign exchange, just like real estate broker who deals in real estate and properties. Simply, a Forex broker is an advisor who advises you about the forex market. However, the Forex market is not the perfect place to play with as a novice and beginner as there are many criticalities involved along with much risk bearing capacities. Novices can very quickly get their fingers badly burnt. But inexperience is not the only reason to consider using a Forex broker to trade in the high-risk international currencies market.
So, the Forex broker is an advisor who advises you about the forex market and allows you to work for 24 hours a day with major currencies like EUR, JPY, GBP, CHF etc against the US dollar on the spot, i.e. according to the current prices on the forex international exchange market. But the level of profits depends only on your abilities as well as your timely decision.
Although the role of the Forex broker is relatively redundant as a result of technological advancement and increased awareness, we cannot completely underestimate his role. The new paradigm shift has had something of a democratizing effect on the financial markets, and in the years that have followed a plethora of banks and brokerages have extended the range of their services to a new market by packaging up their online trading systems for the retail market, enabling the more modest investor to trade from their own computer screen - even on the previously out-of-reach currency markets. This is where the real role of Forex broker starts.
PIP is nothing special but Price Interest Points. In the forex market, currencies are always priced in pairs. The quoted price is the level where we, acting as the market maker, are willing to buy/sell the currency pair.
Let’s see some more information about Spread. As with all financial products, forex quotes include terms like 'bid' and 'ask”'. The 'bid', in its simplest terms is the price at which a dealer is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The 'ask' is the price at which dealer will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread. The spread defines the trader’s cost, which can be recovered with a favorable currency move in the market. The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded.
Real-time streaming prices
Price certainty on market orders
Competitive pricing
Fixed 3-5 pip spreads
So, the Forex broker is an advisor who advises you about the forex market and allows you to work for 24 hours a day with major currencies like EUR, JPY, GBP, CHF etc against the US dollar on the spot, i.e. according to the current prices on the forex international exchange market. But the level of profits depends only on your abilities as well as your timely decision.
Although the role of the Forex broker is relatively redundant as a result of technological advancement and increased awareness, we cannot completely underestimate his role. The new paradigm shift has had something of a democratizing effect on the financial markets, and in the years that have followed a plethora of banks and brokerages have extended the range of their services to a new market by packaging up their online trading systems for the retail market, enabling the more modest investor to trade from their own computer screen - even on the previously out-of-reach currency markets. This is where the real role of Forex broker starts.
PIP is nothing special but Price Interest Points. In the forex market, currencies are always priced in pairs. The quoted price is the level where we, acting as the market maker, are willing to buy/sell the currency pair.
Let’s see some more information about Spread. As with all financial products, forex quotes include terms like 'bid' and 'ask”'. The 'bid', in its simplest terms is the price at which a dealer is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The 'ask' is the price at which dealer will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread. The spread defines the trader’s cost, which can be recovered with a favorable currency move in the market. The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded.
Real-time streaming prices
Price certainty on market orders
Competitive pricing
Fixed 3-5 pip spreads
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