The forex market is active 24-hours a day, 6-days a week and is the most liquid capital market. Currency pairs are traded around the clock and provides traders with an opportunity to speculate, as well as allows corporate treasurers and portfolio managers with a marketplace to hedge their currency exposure. While there are plenty of opportunities to make money, you need to find a forex broker who will act as your partner in assisting you through the maze of daily trading activity.
Choosing a Forex Broker
The first step in determining the right broker for you is determining your needs and which brokers fit those needs. You should look at many reviews of these brokers to see if they cater to some of your requirements. For example, if you are looking to swing for the fences with very little capital then you need to find a broker that will accept small accounts, and provides their customers with leverage.
Remember, your broker is your fiduciary and you should be concerned about the safety of your money. You would be very unhappy if you thought you doubled your money but you could not get your broker to release the funds back to you. Check out the way you can fund an account and how the broker returns your capital if you need to get it back immediately. Also, check out reviews of your brokers security platform and how safe your data is kept.
Education about forex trading products is very important especially if you are a novice forex trader. Prior to risking your hard earnings capital, you should go through the process of specifically learning what security you are trading and how the market moves. Most reputable brokers will have a robust education platform where they teach you about transactions, and the profit and loss calculation based on sample trades. You should know about bids and offers, and the underlying commission structure.
For example, many forex brokers do not charge a commission, which is standard for equities. Instead of paying a cost per transaction, the broker will imbed the costs of trading into the bid offer spread they offer you. The broker buys on the bid and sells on the offer, and attempts to cover their position with a profit. Some brokers even have stop loss protection which allows you to place an order that will guarantee a fill at your specific price. This can be very helpful if you begin to trade ahead of specific economic data releases or announcements from Central Banks regarding monetary policy.
Your broker should have contact information where you can either reach them by email, chat or even by phone. There is nothing more frustrating than having a transaction issue, and not being able to get someone to help you in a timely manner.
Plenty of forex brokers have mobile platforms, which allows you to trade on the go. If this is a priority to you, make sure you test drive the platform to make sure it fits your needs. Many of these platforms are not as sophisticate as the computer driven layouts.
In a nutshell, you want a broker that you can trust, who is responsive, and has tools that will allow you to learn or enhance your trading business.