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Picking a Forex Broker
Forex trading happens online. This makes picking a Forex broker important because the broker and his trading platform are your connection to the markets. You may be able to learn how to trade currency but you need the tools to connect to trades in order to make any money. Here are a few thoughts about the important details of picking a broker.
It Is a Nano Second World
A nano second is a billionth of a second. Electronic trading by fast computers takes place in bare fractions of a second. A pertinent thing to ask when picking a Forex broker is just how fast are trades executed with his platform. What is the reliability of his system? Are trades routinely executed rapidly and without fail or are the glitches that will leave you hanging out there in what quickly becomes a bad trade that you cannot get out of?
Nuts and Bolts
Just how are your orders filled? A good trader sets his stops as he trades. You buy Euros with Yen and at the same time set a price at which to sell and take a profit and a price at which to sell and limit your loss. The bottom line question in picking a Forex broker is if your trading stops are guaranteed by the broker. There should be a precise description of order execution policy available for you to read and fully understand before picking a broker.
How Much Are You Paying?
It is totally possible trade all day long with small winning trades and lose money at the end of the day. In picking a Forex broker be clear about if there is a commission structure. The majority of Forex brokers do not charge a commission but rather make their money from the bid-ask price spread. If, however, your broker charges commissions instead you need to be totally clear about what you are paying and how it will eat into your hard earned profits.
Necessary Tools for Trading
The trading platform that you use and the broker should have tools available to you online. These include news feeds, statistical charting and predictive programs and even live commentary on the markets. An alert service is also handy to help you spot where the action is.
The vast majority of traders use 50 to 1 leverage or less. There are, however, brokers outside of the USA that offer as much as 200 to 1. In picking a broker be careful of outliers. Very high leverage can in fact lead to great profits and it can also lead to great losses.There are a lot of profitable fundamental and technical Forex strategies. But none of them is really based on an all or nothing approach to winning it all in a couple of trades. Beware in picking a broker of those offering too much leverage.
Help when You Need It
There is nothing more frustrating than a computer program, computer or trading system that develops glitches or just plain shuts down when profit from a great trade is in sight.