Forex Brokers Article:

How To Choose A Good Quality Forex Broker
By Bret Freak
How to choose a good quality broker

After you are confident in the way you will go about trading the market, along with the money management rules you will implement, it might be time to find a good broker.

There are many brokers out there to choose from so, it is worth while doing some initial research before choosing a broker. Some things to look out for when choosing a broker include:


Low Spreads

The spread is the main way brokers generate their profits. The spread is the difference between the price at which you can buy a currency, and the price at which it can be sold at any particular point in time. When looking for a broker, keep an eye out on their spread costs. The less the spread, the more money you will save and the faster you will be making a profit in a trade.


Quality registered institution

In the United States, brokers should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) http://www.cftc.gov. They should also be a member of the National Futures Association. You can verify the brokers CFTC registration and NFA membership status at http://www.nfa.futures.org/basicnet/. If the broker is not backed up by a reliable institution, dont bother with them its not worth the risk.


A wide range of leverage options

Leverage is needed to trade currencies due to the fact that price movements are only fractions of a cent. In general, leverage is expressed as a ratio between the amount of capital you provide to the amount a broker will lend you. For example, take the example of the ratio of 200:1. What this means is that the broker will lend you 200 times the amount of money you provide. Just keep in mind the more leverage you use, the more risk there is in getting a margin call, however you also have the potential for larger profits and vice-versa. In general, when starting out with a small amount of capital, make sure that the broker you are using offers a wide range of leverage options. This will give you more control over the risk exposure you should be prepared to take.


A wide range of tools

The majority of the larger brokers offer a range of trading tools to their clients. Most brokers can provide

you with real-time currency prices along with other various tools. Ensure that your broker provides all the tools you need to trade successfully. Other tools could include:

Real-time currency price charting

Technical analysis tools

Fundamental analysis commentaries

Economic calendars

The good brokers offer two or more types of accounts. For example the smallest account size is known as a mini account. Mini accounts require you to provide at least say $500, and with that you are offered a high amount of leverage. Leverage is required to profit from such small amounts of trading capital. Standard accounts also have a minimum capital requirement, usually somewhere between $1,000 and $2,000. In the end its important to choose a broker that has the right leverage and services that suit your needs to go with the amount of capital you have dedicated to trading the currency market.


Customer Support

Forex is a 24-hour market; therefore 24-hour support is essential. Can you contact the firm by phone, email, chat, etc? Do the customer support representatives seem to know what their on about? The quality of customer support can vary considerably from broker to broker, so be sure to check it out before opening an account.

One thing you could do is contact a number of brokers to get a feel of how quickly they can respond to enquiries. If they dont respond quickly, and with a reasonable answer dont give them your business.


Miscellaneous

Its a good idea to talk to other traders in an effort to find out who are the better brokers out there. As in any industry or business, there are some dodgy ones. brokers are no exception. There are many forums on the internet these days that are dedicated to discussing all areas of trading, including the discussion of brokers. These are great resources you can use allowing you to find some valuable information that could just save you being ripped off by some unscrupulous broker.


Conclusion

By taking the time and effort to do some initial research, you will be able to choose a reliable broker. This might just save you a lot of stress and troubles you may encounter if you were to choose any old broker.

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