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How to Choose a Best Forex Broker

1. Choose a honest forex broker with good reputaion.

Since the forex market is a less regulated or unregualated market, it is ever more important whether a forex broker behaves with integrity with its clients. A best forex broker should be a honest one. You want to be sure your money is in safe hands and if you want to withdraw funds or profits, it can be performed in a normal business way. Check to see if a forex broker is registered with proper regulatory agency, for instance, National Futures Association (NFA) in USA, Financial Services Authority (FSA) in Britain, Australian Securities and Investments Commission (ASIC). Guard against possible forex frauds and scams. Investigate regulatory actions taken against any forex broker registered with the Commodity Futures Trading Commission (CFTC) in the United States as well as information about these forex brokers through the National Futures Association (NFA) Background Affiliation Status Information Center (BASIC). You may want to check if the forex broker has substantial assets. Also, read reviews and forum discussions about the forex broker. The forex broker ranking may also help.

2. Compare spreads offered by forex brokers

Spread is the difference between the bid price and the ask price quoted by a forex broker. Forex brokers may differ in their bid/ask spreads; some forex brokers offer fixed spreads, while other brokers' spreads are variable. Variable spreads may change during different time periods of the day, and a wider bid/ask spread typically occurs when a currency pair is illiquid. Lower or lowest bid / ask spread is preferable for forex traders. Meanwhile, investigate whether the forex broker charges commision or any other fees in addition to spreads.

3. Reliable System, Fast Execution and Low Slippages

For most forex traders, a best forex broker should offer reliable trading system, fast execution and low slippages. Make sure that the system does not lose Internet connection frequently or crash during critical times. Order execution should be fast with low and rare slippages. Try with a demo account may help find out the conditions of a forex broker's platform.

4. The platform provides sufficient functionalities and features.

Platform functions and features that enables placing limit and stop orders, One-Cancels-Other orders, trailing stops are very useful in forex trading. Some forex traders may also want to implement scalping strategy, hedging strategy, automatic trading, or mobile trading. Check to see if the forex broker's platform has the functionalities and features you need. If you want execute autormatic trading programs writtern in MetaQuotes Language 4, you need to ask the broker whether MT4 is available.

5. Choose a forex broker whose capital requirement suits your needs.

Some forex brokers require less than US$10 for a forex trader to open an account to start trading. Some other forex brokers offer mini account which has a lower capital requirement than standard account. Compare the forex brokers and select the best one according to your investment goal.

6. Does the forex broker provide the lot size you wish to trade?

A noivice forex trader may want to start trading with smaller lot sizes first. Some forex brokers let you decide lot size by yourself.

7. What is the Maximum leverage offered by the forex broker?

Most forex traders use leverage in their trading. Leverage in forex trading is the ratio of the amount that a trader can be buy or sell to the amount he deposits. For example, with leverage at 100:1 a forex trader can buy $10,000 worth of a currency with $100 in his or her forex account. Some forex brokers offer higher leverage, while some brokers allow forex traders to choose from several leverage levels. Higher leverage can enable a forex trader to increase profits with the same amount of capital invested, though the risk grows in the same time.

8. Good Forex Trading Resources and Tools

Best forex brokers should provide good forex trading resources and tools, including at least integrated real-time charts, real-time news and data and technical analysis tools. Investigate the quality of the real-time news and types of technical indicators provided by a forex broker. Some forex brokers provide free training courses, webinars and vidoes, which may be helpful. Moreover, a few forex brokers provide to its clients free trading signals, which may cost a fair amount of money to purchase otherwise.

9. Quality Customer Support

Top-quality customer support often come with best forex brokers. Check the quality, availability, response time, and communication media of the forex broker's customer support. Is customer support provided via phone, and/or live chat, and/or email? Is the support available 24 hours a day? Are problems resolved with little delay and good quality?

Related topics:

How to Use Commitments of Traders Report (COT) in Forex Trading

How to Perform Fundamental Asnalysis in Forex Trading

How to Perform Technical Analysis in Forex Trading

Use Parabolic SAR in Forex Trading

Measuring Sentiment in Forex Trading

Approaches of Risk Management in Forex Trading