Selecting a Forex Broker

[Eleanor Ritter]

The popularity of online forex trading has expanded at a never-ending
pace over the past five years and so has the number of forex brokers
as well. Competition among foreign exchange firms is a good thing for
those who trade forex as it encourages more choices, better services
and all around improvements.
So what are some of the items one should look for when selecting a
foreign exchange firm to open and trade a FX account? Directly below
are few items you may want to take into consideration when selecting a
forex broker.
Forex Pip Spread
Unlike commodity futures and equities the foreign exchange markets are
not traded on centralized exchanges. Therefore, the pip spread will
vary among forex brokers. This is by far one of the most important
issues you will want to address when selecting a firm to trade the
foreign exchange markets.
Forex Online Trading Platform
Good forex trading software will show live spreads that you can
actually initiate trades at. This is commonly referred to as "what you
click is what you get". It should also offer the ability to initiate
market, limit, stop and contingent orders at a minimum. Additionally,
the platform should be reliable so that it isn't prone to crashes and
lockups.
You'll want to try a demo of any platform that you are considering.
However, be sure to watch for demon platforms. A demon demo platform
is one where the demo greatly varies from the actual platform.
Types of Forex Trading Accounts
Forex brokers usually offer the following types of foreign exchange FX
accounts:
Mini Forex Account: Allows you to transact in small deal sizes.
Normally, the lot size is 10K as opposed to the regular 100K lot size.
Standard Forex Account: Allows you to transact forex deals in the
standard amount of 100K.
Institutional Forex Account: These types of forex account are designed
for individuals, corporations, or large funds that trade in large
amounts. Additionally, other services are usually provided for these
account types such as API connectivity. Types of institutional forex
solutions include the Currenex and FXall platforms. These types of
forex platforms aggregate large amount of liquidity and that is what
large foreign exchange traders demand.
Financial Stability
Lastly, you'll want to inquire out about the financial stability of
any forex broker that you are potentially considering to open an
account with. If a broker is vague when it comes to questions about
their financial stability it would be wise to look elsewhere.
Choosing a forex broker doesn't have to be a monumental task, but
don't rush into any decisions either. Shop around and try out their
trading platforms before you make a commitment.

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