Except the thinking that you are a huge financial institution or a bank, you will definitely need a trader for the purpose of trading currencies. All the traders demand a broker to trade in Forex market. This is an important step that should be taken prior to the time you start trading various currencies. This is not as difficult as there are large numbers of brokers in Forex market.
Yet all the brokers are not similar. You should find such a broker who has the capability to meet the specific needs in the role of a trader. Keep in mind that all the brokers do not provide same services and do not have similar policies also. This affects the ability of trading in an effective manner.
Five Important Broker Services
This list offered here consists of the basic services that a Forex trader who have just started trading will want from a broker. You should confirm with each broker that they offer these services. If they do not offer, you should look for any other broker.
Available Pairs of Currency
You should look for a broker who can deal the important currencies including CHF, AUD, EUR, CAD, JPY, USD and GBP. Obviously, you should not plan to trade all the currencies but only the important currencies should be provided by the broker.
The pairs of currency meant for trading can affect the ability to make an entry into the trades according to your choice. If a broker does not provide this service, move to another broker. You should not wait for a trader to include large number of currencies on the platform of trading.
Low Costs of Transaction
The costs of transaction are measured by pips number. A best way for determining the costs of transaction is to have a glance at pip spread. A good thumb rule is to examine EUR/USD spread. Make it a point that it does not cross five pips. If you find that it crosses five pips, you should immediately ask a broker regarding high costs of transaction or just choose another trader. The costs of transaction can affect profit directly so you have to consider the service in a serious manner.
RequirementOf Margin
Even if you might want to prevent utilizing margin, you will likely to utilize margin in the currency trading. Like the costs of transaction, the requirement of margin has to be very low. If the requirement of margin is low, you will have a great ability for high gains. The requirements of margin should not cross ten percent. Still, the dealers should be careful while utilizing margin and prevent using large number of leverage or margin. This is regarded as a big mistake that most of the traders commit. Utilize margin in a prudent manner and make sure to select broker that maintains the requirements of margin to minimum.
Requirement of Minimum Trading Size
There are various kinds of accounts offered by several brokers. The two general kinds of accounts are mini and standard. In the standard account, a dealer utilizes lots of nearly one lakhs units. On the other hand, in a mini account, lots are generally ten percent of the basic size. One of the most interesting things to be kept in mind is that margin for a mini account is about 200:1 which double the accessible margin of standard account is. However, the large leverage should be only used by an experienced trader.
Two different accounts carry various risk levels and potentials for gains. Mini account is perfect for the Forex traders who are new in trading as when the potential of profit is low, the amount of danger is lower. In fact, a dealer can easily open mini account with nearly three hundred dollar though two thousand dollar is suggested as minimum amount. Basic accounts are generally used for more skilled traders who will offer money to the accounts with nearly ten thousand dollar and more.
Hours of trading
Most of the brokers will align the hours of trading with several hours in the trading market. These timing is from 5:P.M on Sunday and 4:00 PM on Friday. You should confirm these timings before selecting a broker. If dealerdoes not trailthese hours, look for another broker.
Select Good Prospects
Several brokers will provide these elementary services. A trader who has just started trading should choose three brokers and compare it in a close manner from the basic five brokers to the arrival of trading stage. Taking enough time to look for a dealerwith whom you feel comfortable is important for the career in trading. One will have to spend large amount of time with the broker sothey have to demand services that are needed for trading in a successful manner. There are several Forex traders so spend enough time to look through a bunch and choose the correct one.
Fraudulent Dealers
With the increasing number of dealers in a market, the quality and number of services has also increased. On the other hand the totalunscrupulous dealers have also risen. Commodity Trading Commission has made a list of different signs that an individual or a company might be engaging in the fraudulent activity.
