How to Pick the Right Forex Trading Broker

By Davion Wong
Published: November 26, 2007
Email

Picking the right forex trading broker can be a tedious exercise for most traders. There are more than a hundred online brokers today and more are coming on board. Since the foreign exchange market is worth trillions of dollars, it offers lucrative opportunities for brokers to set up their firm online. The challenge is with too many choices, it is hard to decide which is best for you. This piece of information would provide you with the necessary tips to pick an ideal forex trading broker.

Since the foreign exchange market is decentralized, it can be hard to identify fraudulent practices by unscrupulous brokers. When finding a broker, do make sure to follow the following pointers and your chances of finding an honest and reliable forex trading broker are dramatically increased!

1. Always request for references that you can speak with.

2. Do a check with the local regulatory agencies and make sure that the forex trading broker is registered. For US-based brokers, see if they are registered as Futures Commission Merchants (FCM) with the Commodity Futures Trading Commission (CFTC) and registered with National Futures Association (NFA).

3. Compare the account details such as the minimum deposit required, leverage, spreads and so on. Ask them specifically are there any commissions chargeable, lot fees, etc. This is to ensure you do not incur hidden costs. Some sneaky traders deliberately give you an impression that they are the cheapest to use but in actual fact load you on hidden charges.

4. The trading platform needs to be user-friendly. Many traders especially first-timers find it challenging to navigate around the site just to make sense of the charts and currency prices. If there are demo accounts, try them.

5. REQUOTING. This is a big pitfall that many traders fell into before realizing. Low spreads and commissions do not mean much if the forex trading broker decides to "trick" you with requoting. Basically, what it means is that when you transact with a buy/sell call for a currency pair at a certain price, the broker requotes and charge you on the requoted price rather than what you see.

The difference in transacted prices can be as much as 9 pips and beyond. Be wary of those dealers that keep requoting when you are making huge gains! It is common to have occasional ones but when it happens way too often, you should smell a rat. Always choose one that have a "no requoting" policy.

One best broker you can find is GAIN Capital. Gain Capital provide the best possible execution on each and every trade. Their best execution goal is supported by strong forex liquidity relationships with over a dozen of the world's leading FX banks, giving them access to a liquidity pool that exceeds $2 billion. GAIN's deep liquidity pool attracts both traders who require the ability to execute larger, institutional-size deals. Staffed with former interbank traders, GAIN's desk routinely handles customer transactions from $100,000 to $50 million. GAIN Capital Group is a registered Futures Commission Merchant (NFA ID #0339826), regulated by the Commodity Futures Trading Commission (CFTC). As an FCM, GAIN must uphold the highest standards and business practices and is subject to strict financial requirements and reporting. Interested parties can visit the NFA web site at any time to review GAIN Capital's record as an NFA member. Open your trading account today!

Learn everything about forex trading from Davion's wildly popular Forex Trading Made Easy blog - from mastering the basics of foreign exchange trading to discovery of new trading tips, strategies, tools and more.

- 1462 Views

View Comments (0)

Hi! You're viewing as a guest. To access our special forex trading resources, Sign up today. You'll get unlimited access to our forex currency trading systems, tools, articles, news and more.