What I Can Teach You About Trades

A Guide to Forex Brokers

You need to understand many things to do with forex trading before you can start on the actual trading. Those who were not ready but decided to start anyway reported huge losses in a short while. You have to be conversant with the main critical qualities a forex broker has. This will guide you in selecting the best forex brokers. This will be your guide in deciding which one to pen an account with.

You have to think of criteria like forex margin, forex leverage, ECN forex and forex spread. You can as an example analyze the margin offered by the forex brokers. A 2% margin affords you a leverage of 50 times on your money. This seems to be the current maximum one can leverage.

This declared maximum has not gone down well with forex brokers coalitions, with many of them plotting to trade in foreign markets, so a to overcome that limitation. Look for review sites so that you can find out the best places to trade. You have to be very careful where the safety of your money is concerned. There has to be in place enough regulations that ensure you shall not lose your money hen a broker goes bankrupt.

You need to know then if the brokers are market makers or use ECN. You will see the sense of this information. You cannot rule out a forex broker who has a dealing desk turning against your positions. ECN brokers are therefore preferred. You also have to consider that ECN brokers may turn out to be more expensive, when they decide to charge a commission per each trade. You therefore have to find a way to balance between these two, to get the most out of the situation.

You need to look at what kind of forex spread there is. Where there is a low spread, it is to your advantage, since you will not be charged huge commissions. ECN forex brokers offer very low spreads since their platforms can tap into a huge pool of liquidity providers. You also have to determine whether the spreads are fixed or variable. Variable spread situations usually mean there are wider fluctuations any time there is a major financial news announcements. Spillage is another thing to think about, where your order is filled at a price that is not what you were expecting. You need to see what amount of spillage might occur.

These are things you need to consider when analyzing potential forex brokers. They also need to have demo and micro accounts for your practice. This is critical for beginners. After such training only should they access normal accounts.

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