Forex Blog: Currency Trading News & Analysis.

November 10th 2008

How to Choose a Forex Broker

Today, I’m going to take a break from covering the credit crisis in order to cover an important logistical topic: how should one go about choosing a forex broker? There are dozens (if not hundreds) of retail forex brokers, a fact which can be overwhelming to those considering dabbling in forex for the first time. The first step is to assess the quality of the broker, itself. Where is it registered? Those based in offshore tax havens should be treated with some degree of skepticism, as they are subject to lax, if any, regulation. It could be difficult to withdraw funds from an account held with such a broker. Along the same lines, what is the broker’s reputation? Typically, the most "visible" brokers will also offer the best customer service, as much of their business is generated through word-of-mouth. Next, you should examine the product(s)? What kind of trading platform will you have access to? Will you have access to research and advanced (technical) analysis tools? What is the average execution time? The final considerations are financial. In other words, what is the spread and what are the terms of financial leverage. At the same time, you should be careful not to allow this latest aspect to weigh too strongly on your selection, reports The American Chronicle:

It’s far too easy to be attracted to brokers that offer up to say 1:400 leverage, and therefore allow you to take out very large positions with a small margin, but this is a very dangerous game and it’s all too easy to over-leverage yourself and wipe out your account completely.

Read More: 5 Important Things To Consider When Choosing A Forex Broker

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Posted by Adam Kritzer | in Investing & Trading | 2 Comments »

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2 Comments of “How to Choose a Forex Broker”

  1. paul Says:

    Great tips for the newbie but still there are alot so call broker online. It’s difficult to say either they are really what they claim for.

    1:400 – it’s a dangerous game if you’re not sure what you’re capable of.

  2. John L. Says:

    One of most important things when choosing a broker is to ask them are they registrated. Your broker should be registered with a regulation authority. In the US, these authorities are known as either the National Futures Association or Commodity Futures Trading Commission (CFTC), while the Financial Service Authority regulates brokers in the United Kingdom. If your broker is not registrated with them, stay away.

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