TipsSeo – Tutorial Finding a Good Forex Broker Not all forex brokers are created equal. Each will have different tools and services from each other.
You may find a broker that offers great resources and information for analyzing and spotting trends in currency trading but can be lacking on the software platform side.
It is therefore important to do some research up front so that the relationship you develop with your broker can last a long time and be profitable.
To help you, here are some tips for finding a good broker:
#1. Account type
The amount of capital you want to invest will determine what type of account you will open with the broker. Typically, most brokerage firms will offer “mini” and “standard” accounts.
As the term implies, a mini account can be opened for as little as $200. It is suitable for beginners who want to gain experience in trading. However there are instances when trading options such as leverage can be limited on mini accounts. The standard account, on the other hand, offers more options than the mini account but the minimum deposit is also much larger (around $1,000.00).
The platform is basically a program that you will use to get information such as live quotes, charts, your exposure, your profit and loss, required margin, all your open positions, and other useful information.
A good broker will most likely use state-of-the-art technology on their platform, so be sure to find out if it is user-friendly.
All buying and selling should be done easily in just one click. Some platforms also give you access to daily analysis on forex, news reports and forex signals including support and resistance levels.
Leveraged financing is a common feature of forex trading. This basically means you can use credit to maximize your returns.
In simpler terms, what you do is you “borrow” your broker’s funds temporarily to make bigger trades and if all goes well, will make bigger profits.
Therefore, an opportunity is created to control a $400,000 transaction with only an actual investment of $1,000. In this example, the leverage level is x400. An investor should be aware though that if the market turns sour, there is a risk of losing a large amount of money, depending on the amount of leverage taken. So it’s a good idea to learn more about leveraging before exposing your investment to the open market.
Stock brokers make money in commissions, forex brokers make money through spreads. Spread is the difference between buying and selling – the price at which currencies can be bought and the price at which they can be sold at any given time. For investors, a smaller spread logically means there is a higher profit potential.
There are two types of spreads-fixed and variable. The spread stays the same throughout the day. Variable spreads change according to market conditions. A busy market must react strongly in your favor before you can turn a profit.
Spreads also vary by account type. Mini accounts usually charge higher spreads than standard accounts. Therefore, prospective traders should know the spreads of each broker before deciding to register.
#5. Technical support
Obviously, support should be considered such as when software becomes corrupt or when questions arise regarding a particular transaction.
The fast acting support reflects positively on the broker and you can even test this by contacting them with a pre-sales question.
#6. Demo account
Before giving weight to any of the items mentioned above, a beginner should always look for a broker that offers demo or trial accounts. Not all brokers offer demo accounts. A demo account will allow you to trade “play” money so any losses you incur don’t count towards your investment. Needless to say, you also don’t make any money if you make a profit on your demo account. It’s just to make beginners familiar with different forex conditions.
While these may be some of the most important points to consider when looking for a forex broker, there are some “little things” that may come up during your search such as unique promotions or special offers.
However there is enough information above to give you a basis for judging whether some offers are above the board or not. There is nothing stopping you from signing up with different brokers and taking advantage of any special offers they may have. Doing some due diligence at the start will prevent a lot of heartache later on.
This is a tutorial on finding a good Forex Broker for Beginners
A good forex broker should be able to help you become more successful in your trading. Find a forex broker with special offers and make your forex trading profitable.
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