Forex broker, there are probably hundreds of thousands of people in all corners of the world who call themselves by this term. So how do you not only distinguish the real ones from the fraudsters, but also the good ones from the mediocre ones?
If you are a new to the forex trading world, the task of finding the best broker who will offer you the best service, the most high-tech trading software and the best tips on how to trade can be particularly daunting.
Even traders with a minimal amount of experience and know-how have had accounts with two, three or even four brokers before they found the right one.
Some people think that going with the really big brokers are the way to go, but this is not always a good idea. Unless you plan to start trading hundreds of thousands of dollar straight off the bat, the "customer service" you're going to receive from the big firms is likely to be poor, as most brokers don't get out of bed for less than $100,000.
So what makes an ideal forex broker then? Nothing ever worth having in life is easy, but here are a few pointers to get you on the path to the perfect broker for you needs.
First, you should choose a forex broker who's registered with some kind of regulatory body. See if they are registered with the National Futures Association (NFA) or Commodity Futures Trading Commission (CFTC) if they're based in the U.S. If the broker is based in the United Kingdom, check with the Financial Service Authority (FSA).
Next, you should find out if the firm you may do business with has a dealing desk or not. Also do they have fixed or variable spreads, or both? How wide are the spreads? This will tell you whether or not the trading strategy you plan to use will fit in with this particular kind of forex broker.
The next important to make crystal clear with the firm is how they pay you when you turn a profit? Does the forex broker credit your bank account directly, and if so, what's the turn-around time?
Keep an eye on how they make their money off you too. Does this broker credit or debit daily rollover interest? Some brokers either do both, deduct interest, or neither. This information is important to traders who hold positions overnight. These are important factors in determining if a forex broker is right for you.
Finally, the true test of a firm's worth will be demonstrated in how they treat you before you've actually deposited any money with them. Pick two or three firms you are interested in and open practice accounts with them. How they deal with you and how fast they get back to you when you ask questions will show you how they will deal with if you decide to open a real account and trade real money with them.