Forex Broker - How to Pick Your Currency Broker and Get the Biggest Bang for Your Buck

Forex Broker - How to Pick Your Currency Broker and Get the Biggest Bang for Your Buck

1. Look at their Qualifications. Pick a broker registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM). You want to make sure that they are held responsible for their company's actions.

2. Find out if the broker is regulated. This will protect you from fraud and make sure that they are not using your funds to run their company.

3. Look at the types of spreads that they offer.

What is a spread?

It is the difference between the bid and ask prices of the currencies you trade.

Why is this important?

Forex Brokers don't make a commission like Stock brokers do. Instead they take a percentage of the spread. So you really need to look at what that percentage is before trading.

5. Slippage or how easily you can blast through your stop prices. Ask them to give you with details of what normal slippage is in both normal and fast moving markets.

6. Margin requirements. What is their margin requirement. That is, what percentage of the investment in your trades do they expect you to pay to open a trade.

7. Margin Calls. If the market is moving quickly and you do not have enough in your account to keep the trade open they will close out the trade for you. You will then lose a majority of the funds that you had in that trade. Many Forex broker firms will not give you advanced notice.

Trading the currency market has its risks. Never invest more than you can reasonably afford to lose. Picking a forex broker that is familar with your trading style and whose firm has a reputable reputation is the first step to preserving your capital and your profits.

* all information contained on this site is for informational purposes only. It is not intended to give advice of any kind. No investment is completely safe. When making any kind of investment take into account what you can reasonably afford to lose. This site is run by an Independent Freedom Rocks Representative.