Forex brokers are an integral part in the normal trading of the Forex market. They act as the agents who link the buyer to the seller. If you are a new trader, it is important for you to know what to look for in a Forex broker.
Types of Forex Brokers
Market Makers
Market makes are Forex brokers who offer traders the means to trade with and against the broker. Market makers provide liquidity to aspiring traders by taking the opposition position on their traders. They are responsible for offering traders a single bid per currency pair. Market makers can easily manipulate the market prices.
ECN Brokers
ECN (Electronic Communications Network) brokers provide a medium for the buyer and the seller to contact each other. They are responsible for matching the buyers to the sellers. The ECN allow traders to post their own bids and even see the multiple bids made by other traders.
What to Look for in a Forex Broker?
Below are some of the factors one should consider when choosing the appropriate Forex broker:
Transaction fees
In Forex trading, transaction fees are normally calculated in pips. Choose a Forex broker that offers as low as possible transaction fees.
Customer service
A good Forex broker should provide different options to contact him/her in case of any problem. You should be able to contact him via phone or email with ease. Before you open and fund a real money account – especially in online Forex trading – make sure you are guaranteed of getting good 24-hour customer service.
Minimum account size
Different brokers have different size of lots you can trade on. The minimum trading size ranges from 1000 units to about 100,000 units, depending on the broker. Depending on your amount of money, select a broker that offers the proper units for you to trade.
Research and trading tools
A good Forex broker provides the necessary research tools that help account holders to make serious decisions before trading. Before employing the services of a Forex broker, ensure there are some specific research tools such as the market analysis, indicators and Forex chart patterns that can allow you to get the market information which will give you a basis of smart trading decisions.
Online trading platform
Before choosing a Forex broker, ensure they have an online platform that is secure and easy to use.
Leverage options
A good Forex broker should give you numerous leverage options. You should have different leverage ratios to choose from. Low leverage ratios can be advantageous to you.
If you consider the guidelines above, sure you will get the right Forex broker who will ensure your investment is safe. They will assist you to grow your investment and reap better benefits.