Choosing a forex broker is not an easy task. As there are hundreds of forex brokers present there, one could say that the forex traders are spoilt for choice. However, that is not really the case since picking a wrong broker could spell doom for a trader. It’s a matter of trusting somebody with your hard-earned money; so absolutely no lapse of caution could be permitted in this area. Below are described some of the criteria by which a forex broker could be chosen:
The first thing you need to bear in the budget with which you’re going to enter the field. Your resources, risk capital (i.e. how much of your hard-earned money you could afford to put at stake), trading style, everything need to be carefully analysed and put under scrutiny, if you’re to find the broker who suits you the most. Different brokers require different amounts of down capital for trading, so make sure you select one who can offer you the amount that you can make do with.
The kind of ‘lots’ a broker offers is an important point. In case you’re low on budget, you should be trading in micro lots; and also hire a broker who deals only in micro lots. Similarly, traders who prefer to trade mini or standard lots, they need to find the trader who deals in those respective lot categories.
Make sure that the brokerage firm does not have any restrictions regarding the amount that you are allowed to have in a micro or mini account. If you’re a ‘standard lots’ trader, then you will be able to trade in mini and micro lots freely.
If you’re a scalper, then you need to find out whether your prospective broker would allow it. A good number of brokerage firms are averse to scalping, so make sure that you have your broker’s permission in written.
The brokerage firms must have real tight spreads if you’re aiming to do multiple trades in a day. Keep in mind that the bigger the spread, the higher would be the cost. So you should gauge your trading strategy and numbers in accordance to the amount of money you can afford to spend. The greater the number of spreads, the more money you would be spending.
Finally, the process of depositing and withdrawing funds in and from the accounts should be easy. You should know the rules for depositing money in a particular brokerage account, and whether there is any minimum amount and specific method of deposition that one is required to follow. Many brokerage firms have a law that in case you make a deposit by a credit card, then you’d be required to only withdraw the same (or less) amount as the one you’d deposited.
So, keep all of the above in mind, and you’re good to go.
Bookmarks