Forex Market: how to choose a broker - third section
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by Dantes
Since most of the requests for Forex market are both public and private, it seems right to immediately dedicate a space for further its study. Before explaining my methods for products typically traded on Forex market, we must choose a broker, which is not easy in a market where there are many operators that seem to offer attractive conditions and prospects for easy earnings. It is not my intention to make here a list of those that I consider most valid, but to indicate to you some basic criteria through which you can make your choice with full knowledge of the facts.
An important aspect that is often overlooked is in what ways I can deposit money into my Forex account and in what ways I can withdraw it; we also need to know exactly the currency times for crediting both in payment and in withdrawal. I suggest to choose a broker that offers short and certain times with various choices on payment and withdrawal methods: beware of those who offer easy and quick payment methods, while for the withdrawal, everything is more complicated and waiting times to regain our money exceed 10 days.
Another thing to know to assess the reliability of a broker is the authorizations and licenses that the broker can boast. Normally authorizations and licenses are granted to brokers by control companies which require the broker to observe a series of rules, moreover periodically the broker will be checked and in case of irregularity, the authorization can be revoked, so it is good to choose a broker that has authorizations and licenses from independent control companies of proven seriousness that require the broker to strictly follow the severe rules aimed at protecting the market and the investor client.
Now let's see a very important technical detail: the spread, that is the difference between the purchase price and the sale price. It is good to check the spread that the broker offers for each financial product that interests us, and which type of spread the broker applies, as there are two types of spread:
- Fixed spread: that is a spread that, theoretically, does not change, even if in certain market phases can be temporarily changed.
- Variable spread: a spread that varies at the broker's full discretion depending on the market conditions (real or presumed), so it can happen to have advantageous spreads, even lower than the fixed ones, while at other times they can also be exaggeratedly high, practically a spread that can vary continuously.
Another fundamental point to choose a forex broker is to evaluate the difference between a broker with no sales commission and a broker that requires the payment of commissions for each of our transactions. Apparently, the choice may seem obvious but in reality it is not so, because the broker which requires the payment of sales commissions normally offers lower spreads, so I suggest to calculate whether the spread difference fully offsets the commission payment so as to make the right comparison and choose the proposal that is more convenient.
Another parameter to consider when you choose your forex broker is the maximum leverage offered by the broker and the possibility to change it to our liking up to the maximum allowed. Leverage is a useful tool for the trader to carry out trading operations using a smaller amount of money; for example if we select a 100:1 leverage and buy/sell for the value of 1 dollar we carry out a transaction for a value of 100 dollars and all profits and losses will be correlated to this last figure and not to the money committed by us.
Is also important a demo account, which is a type of free account normally granted to traders by almost all forex brokers to gain experience and to try their strategies and methods without risk. So check that the broker you like also offers this possibility because I guarantee you that it will come in handy.
Take a look at the trading platforms that the broker makes available.
Usually MT4 and MT5 are standards but others can also be fine because
the trading platform with a forex broker is the least of your thoughts:
the only thing that makes the difference is your ability to use average
winning methods and strategies, putting them into practice with discipline
and perseverance.
And finally check the ease with which you can contact the broker. Normally
almost all forex brokers offer assistance to traders via telephone,
email or chat and this aspect should not be overlooked because if a
technical problem should occur or there is any other reason why you
need to receive assistance or a quick response and solution, the possibility
to contact your broker is a great help and comfort.
Greetings Dantes
dantes@tuttosi.info
DISCLAIMER
The pages on this site do not constitute a financial advisory service nor a solicitation to public savings. Since the indications given are given as simple food for thought, and are exclusively for educational purposes.
Contrary to what is reported by some advertising we want to clarify that on line trading is a risky activity, which should be faced with appropriate knowledge and preparation.
Who operates on the financial markets does so in complete autonomy and under his own 77and exclusive responsibility, therefore the author of this site and its collaborators disclaim any responsibility regarding any operational investment decisions made by the reader.