Choosing a Forex Broker
– You got your education in forex and created your first trading strategy, now what you need to do is choosing your Forex Broker. If this is the first article you found, check the previous steps. Now, in the third step of preparing for the Forex Trading, we will talk about choosing a forex broker for yourself. How to choose a broker, how to distinguish a good broker, what should your criteria be in order to decide on this? So let’s start:
Step 3: How to Choose Your Forex Broker
Every single forex trader in the market works with a forex broker to do their forex trades. In the modern, online style of the forex, this is how the market works. A Forex Broker is basically the middlemen between you, and the market, and the networks of banks. Your broker will carry out your trades in the forex market with small commissions.
There are many forex brokers that you can choose. All of them will try to convince you to work with them. They will advertise how nice to work with them, maybe how small their commission or how high their “leverage” is. However, you need to know that some brokers are just there to make you burn your investment money. They will try to excite you to deposit a significant amount of money, knowing that most beginners will burn their first investments.
Don’t get excited by seeing an extreme leverage number, such as, a leverage ratio that allows you to trade $500,000 if you deposit only $500. These brokers offer you such leverages to make you spend your investment easier. This “first” deposit is all they want from you. This kind of brokers doesn’t see you as long term traders/customers. So, it would be best if you avoid the brokers that advertise massive leverage.
Another factor you should be careful about is the commissions the broker will charge. Some brokers have very high commissions. You should be looking for their quotes and see the spread which is the trade commission. Good brokers have narrower spread numbers. A narrower spread means that your trades will cost less. As long as the spread isn’t unreasonably small which can be suspicious, you shouldn’t go with a broker who charges a larger spread.
Also, try to find a broker that offers demo accounts for the new traders. This is important for our next step here. Nowadays, almost all brokers offer demo accounts. However, there can be different limitations. For example, some demo accounts have time limits to use. You wouldn’t want this kind of time limits, because you should be able to spend time on the demo as much as you need until you get confidence.
So, in summary, do your research to find a broker who offers reasonable leverage and spread and a demo account. If you can’t find one you can ask people on the forex communities, you have joined earlier. They can tell you about the pros and cons of the brokers as they have firsthand experiences. One important information you can find on community forums is how quick you can take your money from the broker. You can test this by depositing a small amount and withdrawing it back to see how long it takes as well.
Continue To The Next Step:
– Step 4: Spending Time on Demo Account –
This article about “Choosing a Forex Broker” was the third step of “How to Start Forex Trading” topic. If you want to read more detailed explanations on this topic, you can click on the related link buttons taking place on this page.
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