In order to trade forex, you need a broker. When most people hear the word broker, they imagine a person sitting in an office on Wall Street. However, in the modern world of online forex, your broker is the website with which you open an account. The question is: what do I look for when picking an online broker?
What To Do BEFORE Choosing an Online Forex Broker
Before picking an online broker it is important to evaluate what type of trading you plan to do. There are websites that are more suitable for day traders, and websites that are more suitable for the casual investor. The less frequently you plan on trading, the more you can tolerate per-trade commission fees. If you plan on trading frequently, you will need constant online access to all the market data and possibly even mobile access on your smartphone. Therefore, step one before looking at the brokers is to look at yourself.
After deciding what type of trader you are and what degree of trading will be taking place, the next step is money. Everybody holds money dearly, and nobody wants to give it away for free. Therefore, read very carefully all the fine print about commissions and fees. With keeping your type of trading in mind, you will want to look out for the following different possible fees (and their size): Per-trade commission Account-opening fee Account-closing fee Inactivity fee Minimum-account-size fee Personal assistance fee Paper statements fee Account transfer fee(Not all brokers charge all these fees, but it is good to look out for them)
Aside from fees, some brokers demand a minimum account size. If you plan on trading a lot, then you have nothing to worry about; however, if you plan on just dipping your fingers for a taste, it might limit your options. In general, the larger your account, the nicer the broker will be (in terms of conditions).
The Scoop of Free Stuff
Everyone likes free stuff. You should look for brokers that offer free tools. Common free tools include online tutorials, free calculations and analyses, quotes, and trading software. Some brokers might even give you free money if you open an account with a certain minimum.
If you plan on branching out beyond forex to stocks, commodities, or anything else it pays to find an online broker that offers all those options. Another stat to look at is the interest rate on the cash in your account.
Last but not least, it is very important to look at security and Im not talking about hedging your investments but rather security of personal information. In order to open an account with an online broker youll have to give over sensitive account information, and you want to make sure that information is safe. It is important to read the websites security policy and if possible to check an indicator for a secure connection from the best forex broker. (Many browsers have indicators that will tell you if the website offers a secure connection or not).
The next step is to open an account and start forex trading or stocks day trading. Good luck!
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