How To Select The Right Forex Trading Broker

October 21st, 2008 by Ivan Tan

The Forex Trading foreign exchange market that nets trillions of dollars in daily trading is a highly lucrative market for online brokers to thrive. With so many Forex Trading brokers online and increasing at a rapid rate, picking the right one for you could be a difficult task. Some tips are given below which, it is hoped, would make your task a lot easier and safe.

Fraudulent practices adopted by some unscrupulous brokers are hard to detect due to the decentralized nature of the foreign currency exchange market. You can significantly increase the possibilities of finding a reliable and honest Forex Trading broker by sticking to the following pointers:

1. Ask for references and contact them for their opinions on the broker concerned.

2. Ensure that the broker under consideration is duly registered by checking with local regulatory agencies. With regard to the bona fides of US based brokers, check for their registrations as FCMs (Futures Commission Merchants) with the CFTC (Commodity Futures Trading Commission) and NFA (National Futures Association.

3. Request for their account requirements such as minimum deposit, spreads, leverage etc. and compare the corresponding rates of other brokers. Ask them especifically if they charge any commissions, lot fees etc. to ensure that there are no hidden charges involved. Some tricky brokers will quote excellent rates for you on the surface with many hidden charges underneath!

4. Choose a user-friendly trading environment that is easy to understand and navigate. Check whether all the charts and information displayed within the broker’s website are logical and make any sense to you. Some websites incorporate demo accounts to make it easy for especially the first timer prospective investors to get a hang of finding and comprehending the various charts and information furnished.

5. Some brokers will quote very low commissions and spreads, which may not amount to anything ultimately if he has a trick of requoting hidden under his sleeve. The impact of the broker’s requoting on you is where a broker charges you on prices requoted by him rather than on the pair of prices called by you for trading in two currencies.

An occasional requoting by the broker happening now and then is normal, but you should realize that something underhand is happening when requoting occurs ever so often. This type of ruse adopted by the broker could cost you to the tune of a rate difference of 9 pips and over. The best check method to overcome this is to select a broker with a boldly declared “no requoting” policy.