Earn Money Forex Best Forex Trading Experience
How To know Forex brokers quality ?
Quotes on currency pairs should be guaranteed, as well as the fills on
your stop-loss and limit orders. This is usually expressed as a “no slippage”
policy, where the price offered should be the same as that at which your
market or pending order will be transacted on entry as well as on exit. If
there are no clear rules on this subject, keep searching further. A good broker should have enough financial strength to meet these requirements and
guarantee the quoted prices, at least in normal market conditions.
HONESTY
How does your broker control prices? Are there blatant differences with
other price feeds in the industry? A dishonest broker can take advantage by
delaying entries and manipulating the price feed, showing a different price
or constantly re-quoting, slipping, and spiking prices.
LOCATION
Where is your broker located? If it is an offshore FOREX broker, is there
any kind of regulatory institution where it is duly registered and acknowledged? If not, how can you obtain a guarantee on your funds should the
broker file for bankruptcy? You might obtain some advantages with an offshore business with respect to taxes, but check first to see if it is really
worth the risk.
MINIMUM INITIAL DEPOSIT
It is usually safer to go with a broker that asks a low deposit for starter
accounts. Asking for higher amounts from the start, especially in the case
of retail brokers, can be a red flag. You should look for a broker that asks
for a small initial requirement, usually around $100 to $500, which is
designed for new traders to test the markets with a real account without
putting too much money on the line.
INTRODUCING BROKERS
As you start looking around for brokers, you will find numerous (actually,
lots) of introducing brokers (IBs). Most of an FCM’s business comes
from referrals, IBs spreading the word and introducing the customer to
an FCM. With the farm bill of October 2008, more oversight has been
placed on these IBs. Now, IBs must be registered with the NFA and have
sufficient net capital as set forth by the NFA. This adds a level of protection
to the consumer
IB
It is perfectly okay to use an IB; just do your due diligence. My registered IB is www.Brokersname.com.
One of the benefits I have always discussed with my customers is that when using an IB, make sure that it is able
to assist in all your FOREX needs. For example, I have introduced more
traders to the retail FOREX market than any other person in the United
States. Because of this fact, I am able to assist my customers with much
more authority and resolve than any of my fellow IBs. When a customer
calls me, I can get the FCM on the phone right then and there and help
my customer get a resolution. The reason for this is that I simply have so
many customers that the FCM must listen to me. My goal is the longevity
of my customer, and I know that I will not remain in business if I can’t provide the service my customers deserve.
Thus, when you are searching for a
broker, an FCM, or an IB, just be on the lookout for that personal touch that
is so hard to find these days.
CUSTOMER SERVICE
Good customer service is very important, especially when problems arise.
A broker should treat all its customers with the same level of professionalism and
courtesy and be swift at providing orientation on complicated
matters and questions that could arise when markets are very volatile or
should a technical problem occur with the price feeds or connection to the
platform’s server. Since FOREX trading hours are continuous from Sunday to Friday afternoon,
the broker’s customer service should be available
during the same time span, 24 hours a day, 5 days a week. IBs often will
piggyback the customer service of their FCMs when it comes to specific
trade questions. If you have any question about your closed or stopped-out
orders, you need to be able to receive a fast response independent of the
time of the day.
support service
Some brokers offer an online chat support service; others have only a
phone-based support desk. Make a list of sensible questions, and take note
of the attitude and knowledge the support staff show when they answer.
They always should be courteous and eager to help and have appropriate
knowledge of common matters that arise in day-to-day transactions and
events. If you don’t feel totally comfortable with their answers or perceive
any doubtful behavior, keep looking elsewhere.
SPREADS AND SWAPS
FOREX overnight swap rates should be publicly available, either on the
broker’s Web site or via the trading platform. Some have fixed swaps;
FOREX TRADING SECRETS
others vary slightly every day depending on price fluctuations and number
of transactions. Check for any excessive difference with regard to the usual
calculation of overnight interest.
The spread is the amount of money a broker makes on every transaction its customers perform.
If the difference between the bid and offer
prices is low, the broker’s service is cheaper, and the profit value will be
higher. It is always better to choose a broker with lower spreads.
I always like to say that you get what you pay for. Keep in mind
that just because you get the tightest lowest spreads in the industry doesn’t
that mean you are not paying somewhere else. IBs and FCMs are in business to make
money—profit is not a dirty word—but everyone has to
make money or it is not a good opportunity. You will just have to use good
due diligence or a referral to find the best place to trade. I go to great
lengths to make sure that the FCMs to which I refer customers from
Brokers
Also keep in mind that some brokers, in order to provide the tightest
spreads, are now charging commissions—a fee to get in and a fee to get
out—similar to the equities markets. IBs are usually paid a fee for the customers they introduce to the FCM.
This will have no impact on you as a
trader unless otherwise stated. IBs get paid out of the spread, so if you use
an FCM that has a too-wide spread on the EUR/USD, that spread is too
wide whether you use an IB or not; you just get an extra layer of customer
support for the same 2-pip spread. Again, in some cases (which have to be
disclosed), an FCM actually may increase the spread to compensate the IB
for its referral. I do not allow this to be part of my IB; just check the spreads
yourself or ask.
MARGIN-REQUIREMENT RULES
Examine your broker’s margin requirements and margin-call rules carefully. At what level
will your position be liquidated should the price take a
plunge or rise against your direction’ Some brokers will close all positions
without warning, whereas others will issue some notification that the
account is near the limit they have set.
LEVERAGE LEVEL
The leverage levels can vary a lot from one broker to another, but they are
usually in a range from 50:1 to 500:1. A higher leverage can be somewhat
risky but can give you more opportunities to obtain a bigger profit. A small
initial capital investment will require a higher leverage. (Take note that
CHAPTER 4 PREPARING YOURSELF ADEQUATELY BEFORE JUMPING INTO THE MARKET 43
with leverage comes risk, but with risk comes reward and, of course, the
potential for loss.)
TRADING PLATFORM
You can find a wide array of trading software among brokers, from simple
Web-based platforms to more complex applications that have to be downloaded.
You also will find mobile platforms that give you the opportunity
to trade or monitor your positions while you are on the go. Practically all
brokers offer practice accounts that are an exact replica of the live trading
platform so that you can familiarize yourself with the interface and test
its features.
Professional Traders -looking
The platform should be professional-looking and easy to understand and
operate. Not all of them have the same tools available, but a good FOREX
broker should have at least charts that update in real time, technical analysis
tools, and alerting capability. Some of them also include news feeds.
When I first started trading, I used one of the most complicated trading
platforms known to humankind, or so I thought. I set out to develop an
easy-to-use trading platform based on simple-to-use technical indicators
with color-coded graphics. Today, the platform has many variations and
includes advanced charting capabilities. I refer to it more as a learning
environment than as a software platform because it has education and training integrated into it.
The platform will take a beginning trader and walk
him or her right through the various steps to becoming a professional currency trader.
There are numerous FCMs out there that are currently using
my technology, and there are more every day.
