What questions do you need to ask? Well, for you to be able to trade the Forex market, you first need to select a Forex broker in order to action your trades. This is done automatically, sometimes with only a few clicks of the mouse, which is why it’s important to choose the right Forex broker.
Forex is still a relatively new market and as a result there are many Forex brokers available, each with different levels of service tools and resources. So bearing that in mind what’s the next step? Well, it’s good to sit down and work through the questions below, so you know what to expect. OK – here goes:
- Do you want an automated system to help your trading decisions? Sometimes good but can also confuse. Decide how you want to trade you can always try this out to see what you think. But bear in mind no strategy can be 100% accurate every time.
- Do you want the facility to be able to download your Forex broker’s software on to your own PC? This will restrict you to trading from this PC only.
- Do you want the tightest spreads possible? Is this the most important area for you and your trading? Having access to tight spreads means you hand over less of your money to the Forex broker in transaction fees. However, it’s worth looking at the overall package on offer.
- Which currencies do you want to trade? Many brokers will have dozens to choose from but some restrict their selection to the major eight pairs. There’s plenty of choice with the major pairs though so this shouldn’t concern you too much.
- How much money do you have to open an account with?
- Will you want to pay extra for a guaranteed stop loss? All accounts come with a stop loss but for an additional pip or two you can guarantee your stop loss price to cover any big volatile times during the trading day. Most don’t offer this facility but some do, so it’s worth asking the question, even if it’s only for future reference.
- What type of Forex trading do you want to use? Accounts like Spread Betting are restricted in countries like the US. Check the availability of the type of account you want to open.
- Do you have good access to the Forex broker’s trading floor and help desk?
- What about help and advice, trading tools, strategies, forums and chat lines direct to those who can help?
- Leverage. How much leverage does your selected Forex broker allow on your account? This is important to your risk management as a Forex trader.
The above points are all very important but I would stress that practising on a Forex broker demo account before trading your live account with your hard earned money is essential. There are three main reasons for doing this which are detailed below.
Firstly, signing up to a Forex broker demo account comes with no obligation so if you don’t like the platform, you can cancel your account and move on to your second choice.
Secondly, you can get to know the platform before trading your live account and develop your trading strategy utilising the Forex broker’s trading tools.
Thirdly, with most Forex brokers you can continue to use your demo account, even after opening a live account, so you can go back to it to try out new strategies.
Look for the features you want in a trading platform and from a Forex broker. Make a list of criteria as detailed above and make some calls or better still, if you can go and visit their offices, then that will help even more.
If you are satisfied with the facilities, tools, trading platform, currency pairs traded, pip spread on the price you buy and sell at and demo account, then you should consider trading with this preferred Forex broker.