Forex is a fast moving, highly liquid and very volatile market where split-second timing can make all of the difference between profit and loss. Don’t wait until you bail from a position that’s moving against you to test the speed and honesty of your currency broker.
The Best Forex Broker
It’s not really possible which is the best forex broker or the top forex broker, mainly because some brokers are better for certain trading strategies than others. For example, long term carry for long term carry trades, a major factor would be the amount of “swap” the broker paid each night on pairs with interest rate differentials, while the spread wouldn’t be a major concern.
Conversely, if you using a forex scalping strategy the swap rates will not matter, the spread and execution speed will be of much higher priority.
Online brokers either provide or recommend trading platform software to interact with them. Some brokers have their own proprietary software systems and others provide access ports to commercially available software. The trading platform that a broker uses is only the gateway to their services and, in the scheme of things, is really not that important. What is important, however, is what services your broker provides and how reputable your broker is.
A good broker should guarantee prices with firm two-way quotes as well as guarantee fills on stop loss and limit orders. Anything less than a “no slippage guarantee” policy is an unacceptable level of service and an indication that you should look elsewhere.
There are ways that a dishonest broker can skim profits off of your trade. One of those ways is by taking advantage of what can be up to a 2 minute gap between the time that you place your order and the time that you see the results on your platform. Second- the broker controls the price you see on your trading platform and there’s a custom made opportunity to shave profit from the transaction if the price moved before the transaction was posted back to your screen.
This makes it important that your broker show you what are called “firm prices” and not “indications”. Price “indications” gives the broker room to use your money for their own profit while “firm prices” do not.
It says a lot about their financial strength if your broker can meet these qualifications.
Also find out which exchanges your broker is affiliated with. While there is no Forex exchanges, membership on the Chicago Board of Trade or the London Metal Exchange, New York Mercantile Exchange and other commodity exchanges indicate that your broker is a major player.
Offshore Forex Broker
The big issue with Offshore Forex Brokers can be the lack of regulation. If the offshore broker goes bankrupt, your funds disappear!! It’s always important to find out before going offshore.
Biggest Forex Broker
The size of your broker is very important. A big profitable broker with a lot of customers is far less likely to go bankrupt than a new broker just starting out.
Do your due diligence before trusting your money to strangers. Remember, if your broker offers guaranteed transactions and is a member of some recognized exchanges, you have a good indicator that you are dealing with a broker who will treat you fairly and who will be around for a good time to come.
Regulated Forex Broker
It is almost important to understand the type of regulation that your broker has. Some offshore brokers are not even regulated at all. So in theory they could do whatever they like with your money! American brokers are regulated by the NFA (National Futures Association) and UK based brokered are regulated by the FSA (Financial Services Authority).
An ECN Forex broker actually links buyers and sellers together and charges a commission fee. ECN brokers often have lower spreads than standard retail brokers. They can be ideal for scalping strategies.
Forex Broker Web Based Trading
Some brokers offer web based trading platforms, some of them can be used by mobile phones giving you the opportunity to monitor your trades!
Automated Forex Brokers
FX Brokers that use the popular Metatrader platform have the option to run Expert Advisors. These are automated forex trading strategies.
By: Adma Dababneh
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