Forex broker advantages can be many, but so can the disadvantages. They are your compass in a sea of high trades and higher fluctuations. There might be a lot of compasses in the market, but in a gigantic ocean of sudden movements and unexpected events you want the best quality tools by your side.
Being forex the biggest market in the world, you need the best forex broker on your side. Here is a list of do’s and dont´s that can help you select the best navigating machinery to cautiously guide you through the cold waters of inexperience into the rivers of profitability.
Do choose a forex broker that suggests a prudent approach to trading, especially if you are just starting out in forex. A good broker will show you how to create a stable trading plan that can grow strong with time and will also demonstrate with example how to become disciplined, consistent and rational with your trading.
Don’t choose a forex broker without checking his reputation first. The first and foremost characteristic that a good broker must possess is a high level of security. One easy way of checking his reputation is by doing a google search on him, his IB or the company he works for. Also, get opinions from users and traders on forex message boards. You want to feel completely comfortable with your broker and a little research can take you a long way.
Do choose a broker that offers low spreads. Spreads are the difference between the bidding and the asking price in any transaction. This is the way most online brokers make money, so depending on your strategy choose a broker that charges lower spreads.
Don’t choose a broker that offers you a rate of leverage that might sound too appealing at the beginning but that will invariably make you lose money at the end. A high leverage rate can bring in a level of risk to trading that most beginners can`t handle. On the other hand, experienced traders want to look for brokers with sufficient leverage so as to earn real profits.
Do choose a broker that offers the currency pairs that interest you the most, or at least an interesting variety to choose from. Currency pairs have a tendency to present different breathing patterns and you want to have a good menu of selections.
Don’t choose a broker that wants to be your only information source. Your broker financial analysis could be spot on, but in forex trading information is everything so you want to have different sources of information to compare data.
Do choose a broker that offers 24 hour customer service. Forex trading hours depend on what currencies you are most interested in trading, so you want someone that you can contact anytime, anywhere. Questions constantly arise so it`s important to have someone that has permanent availability.
Don’t choose a broker that hassles with deposits, and especially with withdrawals. No broker should make it difficult for you to retrieve your profits because the only reason they hold your funds is to facilitate trading. Be sure to find a broker that makes withdrawals smooth and easy.
Selecting a forex broker shouldn`t be hard work. It`s important to know what you expect from your trading and start developing your strategy from there. Forex is an interesting journey, and to make it to safe port you want the best compass by your side.
Selecting the right forex broker according to your strategy is the best way to increase your chances of success in forex trading.