Things to Use when Comparing Forex Brokers
It should be made clear that there are many important concepts that need to be clear before forex trading is initiated. If you do not do this but go ahead and trade, you will regret that decision. You, therefore, need to look at the main important qualities a forex broker possesses. This is how you select the best forex brokers. This will be your guide in deciding which one to pen an account with.
There things to look into include forex margin, forex leverage, ECN forex and forex spread. You should begin with look at the margin offered by the forex broker. If you have a 2% leverage that means you can leverage your money 50 times. It appears to be the current maximum one can access.
This imposed maximum has not been received well by forex brokers coalitions, and most have decided to trade in foreign markets, in order to beat the barrier. When it comes to this, you need to read some reviews, so as to get a better picture of where to trade. You need also to be especially vigilant when it comes to the safety of your money. You need to see what rules have been put in place to ensure you do not lose any of our money if a broker declares bankruptcy.
You need to know then if the brokers are market makers or use ECN. You will see the sense of this information. A forex broker who runs a dealing desk can trade against your positions. ECN brokers are the ones you may have to choose. You also have to consider that ECN brokers may turn out to be more expensive, when they decide to charge a commission per each trade. You will have to strike a balance between these too; to go with ECN or market maker brokers.
You need to look at what kind of forex spread there is. Where there is a low spread, it is to your advantage, since you will not be charged huge commissions. ECN forex brokers offer very low spreads since their platforms can tap into a huge pool of liquidity providers. You also have to determine whether the spreads are fixed or variable. Variable spread situations usually mean there are wider fluctuations any time there is a major financial news announcements. Spillage is another factor to consider, where your order is filled at a different price than what you were expecting. You need to have an idea of the kind of spillage that might occur.
These are things you need to consider when analyzing potential forex brokers. You also need to access a demo and micro account for you to practice on. Beginners need to go through this. After then can they use standard accounts.