Sunday, 17 February 2019

How to Choose a Forex Broker

There are many brokers out there how the heck do you choose one, I'm going to give you the three question that you need to ask yourself. I'm very sure you know what broker means. We got a different broker for every sector of the market, whoever as a forex trader there are only certain types of brokers you should be looking for, you need to look for a broker that is more like a business partner, a broker that does not want to intercept with your own money

Online Brokers

The first thing is that it as to be an online broker and that is the fact unless you just watching your money blow away in the wind. You need to use an online broker and it needs to be a retail broker, what do I mean by that, don't go into your local bank, those small little regional banks you have on the corner main street downtown. Don't use them, they were not set up, they may have an online platform but their fees are going to be crazy and if you're unsure which one to use just look at the fees, ask the people hey what do you charge if tell you what they charge that's a sign that it's either not an online one or it's just a small regional bank

1. Involved

What are you going to get involved in, are you looking to trade stocks, do want to trade option, or currencies aka forex, trade futures, because that is going to determine what sort of broker you should be looking at. Some brokers are better than others, some brokers only do certain things, many times a forex broker is only going to allow you to trade currencies, it's not going to allow you to trade options or bonds and other stuff, it's just going to be a currency, so that is my first question what do you want to get involved with. If you have no idea what you want to get involved with then guess what, you're not even ready for a broker yet because you have to know that, in order to figure out what broker you are going to use.

2. Active

How active are you going to be? Are you going to be just trading like three times a week, three times a day, three times a month, that is going to determine what sort of broker you should be looking for. I mean if you're going to be just trading let's just say three times a week or three times a month then you can go with any of the big-name brokers out there. Sure those commissions are a little bit higher, but you are not trading that much anyway so who really cares, you are by no means, a day trader or some sort of super active trader. If you're not going to be very active then go choose whoever you want because those fees are not going to add up against you, however, if thinking about doing 5-6-7 trades a day then you are telling me you want to be a day trader, with that you're going to want to look into what is called

A Direct Access Broker

Direct access brokers are ones that are geared towards very actives traders. They're going to have a much more friendly pricing structure that is usually per share, sometimes per trade, but you need direct access if you're going to be very active because if you want to be a day trader you can use E-trade or Ascot trade. Those fees are very high and you're going to have a big old mountain of fees that really start to add up in a very quick amount of time

3. How Much Money?

This is going to dictate what brokers you're able to use if you're just showing up to the party with a hundred bucks some broker is going to say no we have minimums here, this article is going to be sitting here for the next multiple years and broker change, but just understand that you have to figure out do people have minimums, what exactly is going on with each and every broker because some brokers you can open it up with no account minimum at all. Other brokers are going to require certain amounts of money in order to even use them, a lot of the direct access brokers fit under that, do not go find a Brit direct access broker and think that $500 is going to be enough for you to open up an account. Because $500 isn't even enough to necessarily day trade with, although that can be kind of argued as far as a broker is concerned, direct access only having $500 usually you're going to need more than that

But you know what, if you don't have enough money that's okay, there's such thing as part-time jobs, such things as cutting expenses out of your budget to create more money for yourself, to get you up to maybe those minimums that you may need

Just because a broker may not accept you right now, use that as motivation to get up to whatever those numbers are so that you can actually use them as a broker, but I want to stress this, not having enough to get the broker that you need is not an excuse to just go burn money by paying a higher commission. Well, I only have $500, and I can not use that direct access broker, so I am going to use some broker that an investor or a swing trader should use, and guess what, you're stuck paying those high commissions. That is the attitude of poor people. That is the attitude of going backward, show some patience, show some fortitude, go pick up a job do what you need to do to get your account back up there. If you don't have enough that's not an excuse to take a small account and then go pay high commissions with it. 


What Broker Must Have:

1. Fully Regulated

You want to see that regulation properly and so you know that there is someone looking over that broker making sure that nothing's being manipulated

2. Straight Through Processing

There are two different types of straight-through processing. There's one type which is actually literally straight through to the market like interbank, that's a good one. There's another type of cheeky form of straight-through processing which is just straight to the dealing desk it's almost like not really straight-through processing and you're going to be cautious of that. You might be wondering what exactly straight-through processing means, what this means is when you execute a trade they will give you the best liquidity provider, most good brokers offer a number of different liquidity product provider which give a sort of spread that moves up and down in your mt4 or whatever platform you are using

It's moving up and down for the reason that it's trying to give you the best price possible and when you click that, the application tries to match the perfect price instantly and it's just the computer program that takes the price from the liquidity provider that gives the best price straight directly to the market. That's the type of broker you want, in that circumstance the broker only makes money from your spread so they have no incentive to trade against you. 


That is how you choose a broker, if you don't know what to trade then you're not even ready for this part of the journey, so do your homework right do it in this order and you're going to save yourself a lot of headaches and put yourself with a broker that you should be with.

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