How To Choose A FOREX Broker
The majority of investors who trade FOREX stocks do so through a broker. Depending on the situation, brokers can be either individuals or corporations who buy and sell stocks on behalf of their clients. Brokers make money by collecting commissions or fees for the services they provide to their clients.
You should make sure that a broker is registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) in order to protect yourself from fraud or abusive trade practices in the futures market. A FOREX broker must also be affiliated with a financial institution, such as a bank, in order to be able to provide funds to clients for margin trading purposes.
It will require some effort on your behalf to find the best FOREX broker for your needs. There are brokers who charge a flat fee and others who demand a commission for their services. It may be a good idea to consult with friends and business partners about their broker recommendations before making your final decision. You might get some solid leads, and you’re almost guaranteed to hear about people you should avoid. There’s nothing quite like word-of-mouth marketing to get your message through.
If you are considering investing online, you may choose from a number of different online brokers and then contact their customer service departments. The speed with which they answer to your questions could be indicative of how well they will respond to the needs of their customers. If you do not receive a prompt response and a good explanation to your question, you are unlikely to want to entrust them with your company’s financial information. Just be aware that, as with other sorts of businesses, pre-sales service may be preferable to after-sales service in some situations.
Before deciding on an online broker, request a copy of the broker’s online demonstration account. What features are included in the package?
Is the software up to date and reliable?
Is it possible to trade automatically?
Are there any additional software features that come at a higher price?
Prior to opening an account with a FOREX broker, you will need to conduct additional research.
- How quickly will these brokers execute your buy/sell orders?
- What is their policy on slippage?
- What are the transaction fees?
- What is the spread, fixed or variable?
- What are the margin requirements and how are they calculated?
- Does the margin change with currency traded?
- Is it the same for mini accounts and standard accounts?
- Please remember to inquire about minimum account balances and interest payments on account balances when you speak with a representative. Check to see if your cash will be covered by insurance.
Author: Simeon Bala
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