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Trading Lessons

Tips On Choosing the Right Forex Dealer

Currencies / Forex Trading Jan 17, 2018 - 10:33 AM GMT

By: Kavinesh_A

Currencies

It is a known fact that forex market account for around $4 trillion worth of value each and every day. Hence there is hardly any doubt that it is the world’s largest financial market. In the absence of central marketplace for this market, traders have no other option but to select a good forex broker. They are the ones who will help them to conduct their daily trading activity. If you look around the internet you will come across thousands of forex broker. While this is good, with so many choices available, choosing the right forex dealer could often be a tricky job. The sheer number of options makes the job even tougher. Hence the onus lies on traders to spend some time and identify the right brokers after gathering as much information and knowledge as possible. We will have a look at the main points to be kept in mind when it comes to identifying these professionals. It certainly will help in more ways than one and will ensure that your forex trading gets carried on smoothly without any hiccups and problems.


Do They Have Regulatory Compliance

Whenever you are choosing a forex broker in your country you have to be sure that they are compliant from the regulatory aspect. They should be member of the respective board and commission. Being a member is mandatory and there are no second thoughts about it. These boards are the ones who frame rules, develop them and also come out programs and other services on a regular basis. This is done basically to protect the integrity of the market, investors and traders. These regulatory authorities also help the members to fulfill their regulatory responsibilities. This is an independent government agency and its main job is to regular the forex futures and options. It also helps in protecting the public against fraud, abusive and manipulative practices when it comes to buying and selling of forex. Hence, before hiring these professionals, the onus lies on the traders to find out if the brokers are legally compliant from all points of view. Looking at sites like tranzactii forex will most certainly give you the kind of information required when it comes to complying with legal formalities as a forex broker.

It may not be okay to fall for a forex broker just because it has a flashy website and other such attractive cosmetic features. You have to be sure that they are members of the respective forex regulatory bodies and this can be found out only by getting in touch with the regulatory bodies and identifying the names of such brokers. Today it should not be a difficult task because all these regulatory bodies have the names of the members available on their websites and therefore identifying the name and other details of a particular forex broker should not be a tough and difficult job.

Account Details

It also is important to have a reasonably good idea about the account details of the forex broker who you are willing to associate as a trader. You must pay special attention to leverage and margin. While some brokers might have a leverage of 50:1 there could be others could offer 200:1. When we talk about leverage we are referring to the loan extended to margin account holders so that the traders can buy forex from the market. When we talk about 50:1 we refer to a situation where a trader with an account size of $1,000 can be allowed to hold a position that is valued at $50,000. Leverage always works in favor of the trader and therefore higher the leverage the higher will be the position he will be able to hold in the market. Therefore you must look for brokers who offer decent leverages but as traders you must not go overboard because one wrong session and it could destroy the trader.

Spreads And Commissions

There is no doubt that broker makes money through spreads and commissions.  A broker who works on commissions will charge a certain percentage of the spread which is nothing but the difference between the bid price and the ask price as far as the forex pair is concerned. You need to be careful because many brokers may say that they charge no commissions but they make money with the help of wider spreads. The spreads could be in the form of pips and could also depend on the volatility of the market. The wider the spread tougher it will become for making a profit. Hence these points should be kept in mind when availing the services of a forex broker.

First Deposit

Most forex brokers allow traders to open account with small initial deposits and in many cases the deposits can be as low as $50. However, when you have higher leverage the buying power also goes up quite significantly. It is much more than the minimum deposit. That is one of the main reasons why forex trading is considered so very attractive to those who are new to it. There are a few brokers who offer different types of account with names such as micro, mini and standards which comes different types of initial deposits.

Ease Of Deposits & Withdrawals

Each forex broker has his or her own funding account withdrawal policies. There are a few who allow funding of forex account using debit and credit cards, while there are others who allow PayPal and other modes of online payment. Some also offer wire transfer, bank checks and so on. Hence, you must do your research and choose the right brokers based on your specific conveniences, needs and requirements.

Currency Pairs Offered

Choosing a forex broker is also about choosing the right currency pairs. You must be sure that they offer the best of pairs which covers major currencies like Euro, USD, GPB, JPY and much more. The pairs must be available in as many combinations as possible and this certainly calls for doing some good research and only then should you choose the right option.

By Kavinesh

© 2018 Kavinesh - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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