Before embarking on any challenge, ( yes forex is a challenge to me ! ) it is important to have the right tools.
A good forex broker is a MUST.
There are some points i feel is important.
1) Spread policy.
Spread is the difference between the buy and sell prices and it is how brokers earn. Is your potential broker having a fixed spread or variable spread policy? Usually it will be variable.
Fixed spread are usually higher all round but it gives you consistency. Variable can be rather low during times of high volume. However when it is the down period or when there are important news, the spread may widen. It depends on your trading style.
Which ever you choose, just remember spread of 2 vs 3 makes a big difference in the long run.
For example, after 100 trades, you would have paid 200 pips vs 300 pips !
2) Swap policy.
Swap will be either a payment you make or interest you gain by holding a currency pair overnight. Some brokers pro rate it according to the time you hold the position. Some simply add it in once it pass certain time.
3) Trading platform and server reliability.
Is the broker using a good platform? MT4 is one of the better ones. Read up on neutral reviews or go look at forums like forex factory. Are there consistence complains about the broker’s server?
You definitely do not want the server to go quiet during a crucial moment.
4) Deposit / Withdraw policies.
Is the turn around time good? Any there any reports of non payments?
Deposit / Withdraw charges SHOULD NOT be high if any.
5) Customer service.
Do they have prompt service? Engage in a live chat ( most brokers have one ). Does the staff know their products well? Are they professional?
A poor experience from here will definitely be a cause for concern.
Is the broker regulated? You definitely need to look for one that is. Otherwise you are really on your own.
Examples of regulators will be the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA).
Do not rush into a broker. Read around and look at what people are saying about the brokers.
There is a link i will like you to know.
BASIC contains Commodity Futures Trading Commission (CFTC) registration and NFA membership information and futures-related regulatory and non-regulatory actions contributed by NFA, the CFTC and the U.S. futures exchanges.
This gives you a heads up with regards to any potential problem with your intended broker 🙂