How to Choose an FX Broker
1. Are they regulated?
Before you look at spreads, reviews and more, check what regulating authority the broker is registered with. UK brokers should be registered with Financial Services Authority (FSA) and US brokers can either be registered with the National Futures Association (NFA) or the Commodity Futures Trading Commission (CFTC). Keep away from brokers that are not registered at all.
2. Know the difference between dealing desks and non-dealing desks.
If the broker does not have a dealing desk it means that they will provide immediate access into the interbank market. In other words if no dealing desk system is used, positions are automatically offset and then transmitted directly live to market.
A 'Trading Desk' also known as a dealing desk is where transactions for buying or selling foreign exchange take place. They can be found in most organisations which are involved in trading investment instruments. They are usually used by broker dealers that need to make instantaneous transactions and control and fixed spread during volatile sessions.
Check what the spreads are first, whether you pay commission on top of this and do you pay per round turn lot (pay the charge once) or on the way in and out (where you would pay the charge twice). A fixed spread may seem better than paying a commission on trades however a large spread will cut into your trading profit very quickly, especially if you have to pay it entering and exiting the trade.
4. Demo Account
Most brokers will offer a demo account. Pick your two favourite brokers and test them, ask as many questions as you need to. This will give you the opportunity to test reliability, speed of execution and slippage.
5. Customer Service
Make sure you get a direct contact that will look after you personally. There if you have any problems you have someone that you can phone straight away. If you are going to be loyal to one broker you want them to be loyal to you. There are plenty of small firms, which although they are a little harder to find they usually put a lot of effort into keeping you happy.
If you have any other questions or would like to receivee a free starter pack with other tips of trading the foreign exchange market email firstname.lastname@example.org. Here at Forex Trading Floors we have negotiated a great deal for our clients with LMAX. If you would like to benefit from this one opportunity to open a trading account on our great rates click here.