A growing number of people are considering trading as a method of both investment and business. Forex Trading or Currency Trading has become one of the most popular types of investment trading.
Because there is no minimum start-up capital, it makes it much easier for traders to get into the Forex market.
A broker is required to trade currencies if you are not a bank or large financial institution. With an increase of FX Trading’s demand, there has been an increase the number Forex brokers. Many brokers are available to traders, so the challenge for Forex traders is not choosing a broker to trade with, but selecting a reliable one to do so. Unfortunately, not all brokers on the market are the right fit. You’ll need to find a broker who caters to your particular needs as trader. If you are looking a broker you can have a look at Forex Malaysia to find more.
From my experience, this is where the problem lies. Not all brokers offer the exact same services. Your profits will be affected by small differences in charges like the pip spread.
Forex traders need to be focused on the markets to make a good living. Prior to trading forex currency, you should choose a reliable broker.
There are many factors that can make a foreign forex broker a good choice. Here are my top 10 tips for choosing a currency trading broker.
Because there are so many “flying by the night” companies in this market, it is essential to build a reputation. The general rule is to stick with Forex currency traders who are more experienced and have a better track record.
You should verify that their business transactions are authentic. Does the office have satisfied customers and is it legitimate? Is it possible that they are in business for a while or just recently?
You can learn a lot from independent review websites that discuss their experiences dealing with brokers. You should steer clear of anyone who has been ripped-off in the past.
Transparency should be a hallmark of reliable brokers. Information about how they work must be easily accessible online to allow potential traders to find out more information about their reputations and performance.
No matter what country you reside in, it is important to choose a Forex brokerage that conducts business in a country with a regulator. A reliable Forex broker should be regulated and held accountable to relevant authorities.
Swiss banking is one example of the most tightly managed ships in the world. It is regulated by Swiss Federal Department Of Finance. US Forex trade brokers should be officially members of National Futures Association (NFA), and registered as Futures Commission Merchants with the Commodity Futures Trading Commissions (CFTC).
Also, they must follow and comply with industry standards and regulations. It is not a good idea to have an unregulated broker sitting in the middle nowhere holding onto your cash. Good luck with getting your money back, if they go bankrupt.
If a broker has not been regulated by any financial authority, you might consider switching to another broker.
3. Pip Spread Variations
Currency trading brokers are not like stock brokers. Instead they charge a commission based on the difference in pip spread for each currency pair that you trade.
Contrary to other financial market, the currency market does not trade through a central stock exchange. The value of the spread is therefore determined by the broker you use.
Forex brokers post live and delayed prices on their websites. This allows traders, who may be comparing spread differences, to see the spread differences. Some brokers also offer a variable Pip spread.
Because of the Forex Market’s volatility, the concept for a variable spread might seem attractive at first. Although the spread is small during quiet times, it is not enough to ruin your profits. Spreads can increase when the Forex Market is hot.
Many brokers are often referred to “bucket stores” They won’t be in your best interests, and some are known to alter spreads to their benefit.
The bottom line is that you should still look for FX brokers who have fixed or low pip spreads no matter what the market does.
4. Speed of execution
This is a fact that most traders who are new to trading do not notice when they open a trading account.
Many brokers provide live prices through their trading platform. But the question here, is how quickly can they execute the order after you click the “Buy/Sell” button.
You must execute the order immediately, especially if your scalper trades on the 5 minute charts.
It is possible to resolve this issue by opening a demo account with the broker, and giving them a test drive. You can test their trading platform’s execution speeds by opening a demo account.
5. Minimum Trading Account Size
Broker leverages are rising in popularity to help small retail traders who lack capital but want to get a piece of the Forex action.
There are Micro and Nano accounts, but most brokers offer only the Standard and the Mini account sizes.
The main difference between a Standard Account and a Mini Account is that a Standard account trades 100,000 units, while a Mini account trades only 10%, or 10,000 units/lot.
Mini accounts are tenths of the size of regular accounts. This allows you ten times the risk of regular accounts.