Few very important points to consider while
choosing a forex broker:
Low spreads: Forex brokers do not
charge commission but they make money by offering different kinds of spread
structures. That is, the brokerage charges are included in the spread offered
by the broker. Higher the spread, higher the brokerage will be. So while
choosing a forex broker, traders should consider the ones offering low spreads.
Exclusive Tools: Traders need
trading platforms for trading, which is offered by the broker. The trading
platforms should be providing real time news and data. Some of the brokers also
provide technical and fundamental research required for trading. Traders should
make sure that the brokers are providing cutting edge technology for trading.
Quality Institution: Forex brokers
are usually associated with large financial and lending institutions because of
the large amount of capital requirements as they need to provide high leverage
to their clients. The broker should also be registered with FCM (Futures
Commission Merchant) and CFTC (Commodity Futures Trading Commission). So
traders should confirm that the broker is registered with FCM and CFTC and is
backed by sound and reliable institutions.
Wide range of leverage options:
Price fluctuations are very small (fractions of a cent) in forex markets so
leveraging is necessary for trading. Leverage is the ratio between the capital
available for trading and the actual capital. A leverage of 100:1 means that
for $1 invested the broker would lend you $100 for trading. Lower leverage
means low risk but at the same time the profits will be low and vice versa.
Some brokers provide leverage up to 400:1 to their clients. Traders should
choose the brokers providing higher leverage. Sometimes low leverage may also
be preferable to the traders in highly volatile markets.
Withdrawal Options: Brokers have
different deposit and withdrawal options. Choosing a forex broker becomes
crucial when it comes to withdrawals. The broker should have fast withdrawal
methods without any delays. Otherwise it doesn’t make any sense when you are
not able to withdraw your profits when you really need it.
Currency Pairs Offered: The brokers
should be offering a wide range of currency pairs for trading so that the risk
can be diversified to the minimum possible level.
Customer Service: Since forex
markets are open 24 hours, a customer service representative should be
available online anytime. Also the quick availability of the help is also
important.
Account
types: Forex brokers offer different types of trading accounts depending upon
the spread offered, leveraging options and the minimum amount of deposits
required for each account type. The traders should choose the brokers such that
combination of spreads, leverage, technologies etc. suits them the best.