You are now confident in your ability to trade forex markets, and you have established money management guidelines, then it is time to search for a forex broker.
There are many forex brokers available such as FXCM, so it is worthwhile to do some research before selecting a broker. There are some things to keep in mind when selecting a forex brokerage:
Spreads at a Low Level
Spreads are the key way forex brokers earn their profits. Spread refers to the difference between the currency you can purchase and the price at the which it can sell at any time. Keep an eye on the spread costs of brokers when you are looking for one. Spreads are important because they determine how quickly you can make profit and how much you save money.
Quality registered institution
The United States requires that forex brokers register as Futures Commission Merchants with the Commodity Futures Trading Commission (FCM). They should also be members the National Futures Association. The broker’s CFTC registration can be verified. Don’t trust a broker if they aren’t supported by reputable institutions.
You have many options when it comes to leverage
Due to the small price movements, leverage is required to trade currencies. Leverage can be described as the ratio between your capital and the amount that a forex broker lends you. Take the ratio 200:1. The forex broker will lend you $200 times the amount you provide. You should remember that more leverage you use means more risk for you to get a margin call. However you could also earn more profits. When you have a limited amount of capital to start out, it is important that you have a variety of leverage options available. This will give you greater control over how much risk you take.
You can choose from a wide variety of tools
Many forex brokers are able to offer their clients a variety of trading tools. Brokers can offer you real-time currency rates and various other tools. Make sure that your forex broker gives you all the tools necessary to trade successfully. These tools include:
o Real time currency price charting
o Technical analysis tools
o Fundamental analysis commentary
o Economic calendars
Forex brokers that are good will offer at least two types of accounts. Mini accounts are the smallest type of account. Mini accounts are required to have at least $500. You also get a high level of leverage. You will need leverage to make money from small amounts of trading capital. Standard accounts require a minimum capital requirement. This is usually between $1,000 and $2,000 You should choose a broker with the right leverage, services and capital requirements to trade the currency market.