Choosing an Online Broker as a New Forex Investor

Choosing the best online broker is critical when someone is a new forex investor. There are forex brokers who provide in-depth market data and free demo accounts to test-run their trading platform. There are other brokers who do business only with experienced clients or institutions. A new forex trader should choose a broker that provides instructional support, market data and free demos of their services.

Taking a demo run with several different forex brokers will allow a trader to find the best services and trading platform to suit her needs. Before any broker is considered, make sure they are registered with the proper agencies and reputable.

A trader should want only a credible broker handling her money. This is why the proper affiliation and certification of a brokerage firm is crucial. Any forex broker trading with U.S. clients should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC).

Low Spread Trades

Currencies are traded in pairs, and the difference between the bid and ask prices is known as the spread. Forex brokers do not charge a commission for each trade; instead, they make money on the spread. Ideally, a trader should look for a broker that has the lowest spread. Lower spreads generate more profits per trade.

What Type of Tools Does A Broker Offer?

When selecting a forex broker, check to see what services and tools they make available for their clients. Not all brokers have the same number of tools or services. A good forex broker will offer real-time charts, technical data, customer support and trade signals.

A trader that is new to forex trading should look for a broker that offers instructional help. Many brokers will have online classes, videos or articles that help educate new traders. When trying to make money in the complicated forex market, every bit of education and training helps.

One of the most useful tool offered by a broker is the free demo account. The demo account will enable a trader to test her strategies before she uses real money. The best demo accounts use real-time data and allow the trader to add technical indicators to charts.

Leverage

Some forex brokers offer a 1:50 margin, while others go as far as 1:200. A higher trade margin allows traders to enter a trade with a small amount of capital. Being able to enter a trade with a low margin requirement is helpful when a trader transitions from a demo account to live trading.

In the beginning, trading orders can be set at lot sizes and margin levels that will require the least amount of money.

If a trader is selective and looks for a broker based on objectives and the amount of services needed, the trader should find the perfect match.

The key to getting started trading in the forex market is not to sign up with just any brokerage firm. View the brokerage firm as a partner that should enhance the opportunity for success.

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