There is one way why the Forex market is similar to other Stock Market – because it makes you to enter trades through a broker. However, very few forex brokers are compared with other several stockbrokers.
You cannot trade in forex market easily using the facility of E-Trade, Fidelity, etc. You must take help of a broker who only specializes in the forex market.
Although, a limited number of forex brokers are available, but still you need the best forex broker, because there is a differences in specialties.
Some brokers specialize in mini-account; some require several thousand dollars to open an account; others fall somewhere in between. According to your investment and portfolio size, several key factors need to be determined while selecting a right broker.
To work with a company is an ideal solution that offers you a variety of trading systems and negotiable rates (interest and spreads) that you do not have too run around.
Factors to Consider While Selecting a Broker
- Interest rates – Some brokers might pay interests daily on the funds leveraged, in addition to earn money through forex market.
- Trading Platform – The key to select right trading software or platform is finding one that is friendly user. The worst thing that happens is that, when you try to execute a trade on a system that you cannot figure out.
- Spread Rates – This is how the brokers make their money; it is like commission costs involved with stock trading. You choose a broker that has cost effective spread rates.
- Leverage Available – Leverage as well, is a negotiated item. Most brokers will provide an leverage of 100:1, but to get a leverage of 200:1, you have to use a premier broker.
- Account Size– Once you decide how much you wish to invest, you pick a broker who is a specialist in that area. Normally there are brokers who specialize in mini-accounts (as little as $100 to start), traditional accounts, and mega accounts.
- Lot Size– The lot size is the number or currency units, a broker normally trades in 1k or 10k lots. This becomes important because you want to take full advantage of your currency units based on how much you have to spend.
- Demo Account– Most brokers have demo accounts, through which you can practice trading. Make sure that you take advantage of this, so that you can experience forex trading with fake money in place of real money.
You can see that, there is a lot to consider besides just picking a company that will take your money and allow you to access trading in the FX market.
That is why, it is better to work with a brokerage firm that has already negotiated interest rates, leverage availability etc.
That is way; you have a better chance of success, and no need to waste your time for that work which is already done for you.
Therefore, do what thousands of other successful investors do, and surround yourself with the right tools, so that you will already be off to a good start.