Welcome the Forex Broker community
Forex brokers - First Forex brokers community on Forexmospherians.com Join the group and help traders to make money.
Forex markets are similar to the equity markets but there are some key differences. This message will show you those differences and help you get started in forex trading.
Choosing a Broker amongst the many forex brokers out there will mean doing your own research which could include some of the following:
The spread is calculated in pips which is the difference between the price a currency can be purchased and the price it can be sold at any given moment in time. Forex brokers do not charge a commission but the spread difference where they make some money. When comparing the difference in spreads from broker to broker remember this "commission" or lower spread will save a trader money.
Make sure your broker is backed by a reliable institution. Forex brokers are usually tied to large banks and lending institutions because of the large amounts of capital involved. Forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). This information along with statistical data should be readily available on the Brokers website or the parent company website.
Extensive Tools and Research;
Forex brokers offer various trading platforms to clients in the same way other brokers offer difference in platforms within other financial market places. Trading platforms often feature real-time chart packages including technical analysis tools, real-time news and data, with some cases offering support for trading systems along with educational material. Always request free trading platform trials before committing to a broker. Most Brokers also provide technical and fundamental commentaries, economic calendars and other research information. The choice is extensive but more so, find a Broker who can deliver what you need.
Leverage is necessary in forex because the price deviations (the sources of profit) are merely fractions of a cent. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading. For example, a ratio of 50:1 means your broker would lend you $50 for every $1 of actual capital. Many brokerages offer as much as 250:1. The lower the leverage will lower the risk of a margin call while also lowering leverage for your money. However the same principle applies but in reverse if you choose a higher leverage increases your risk and potential profits. If you have limited capital, make sure your broker offers high leverage. If capital is not a problem, any broker with a wide variety of leverage options should do. A variety of options lets you vary the amount of risk you are willing to take. For example, less leverage and less risk which could be preferable for highly volatile or exotic Forex currency pairs.
Which Account Type?
Two or more different types of accounts should be available . The smallest is the mini account but there could be a requirement to trade with a minimum. For example $250, offering a high amount of leverage which is needed in order to make money with so little initial account capital. Standard accounts enables the trader to trade at a variety of leverages but requires a minimum initial capital of $2,000. Finally, premium accounts can often require significantly higher amounts of capital. These premium accounts allow a variety of amounts for leveraging. These premium accounts often involve additional tools for the premium service. It is then necessary to secure the broker allows the trader to have the right leverage, tools and services relative to the account and capital.
Always carry out a thorough financial risk assessment and seek independent financial advice from a trained and qualified professional before engaging in any type of trading or brokerage because financial losses can occur.