Its Christmas and today I decided to sit down write a blog.This is due to a number of questions posed by some of the guys in my group regarding picking a retail forex broker so here are my 5 tips
1. Regulation – If you are going to be trading with any broker the very item to check off is whether or not the broker is regulated .there are different egulatory bodies that govern how a broker conducts its business and locally we has the FSB (financial services board ) .In short if a broker is regulated it is highly unlikely that your money will grow legs and make a run for it.The strongest boardies are the FCA(UK) and ASIC (AUS) so if a broker has both licenses then they are pretty legit but either one of the 3 I mentioned is acceptable
2.Trading conditions – now for me this is very important will go into detail about trading conditions in the coming weeks but for now the basics of it would mean good execution and trading costs.execution is a bit different for each broker based on how they structure their business if they trade against their clients(market making) the conditions are usually not conducive for successful trading.Delays in price feed,negative slippage, stop hunting and re quotes .Trading conditions and trading costs can be influenced by the type of accounts that the trader chooses STP Dealing desk accounts generally have a marked up spread which means you will pay a varying for fee based on the size of the spread at the time you enter a position and that can mean a broker can play with the spread to get more out of your trading account but they generally have no commissions .ECN generally have a raw spread and a commission(will go into detail in a later)
3. Withdrawals-Had to include this because its very frustrating to withdraw profits and wait weeks to receive the funds.The one major reason could be a verification issue so make certain that before you ever fund a trading account make sure you go through the FICA verification even if the broker insists .
4.Types of accounts – depending on the type of trading you hope to engage you need to be clued up on the trading tech for each account.For short term scalpers looking for swift execution and low spreads then ECN accounts is a better option same goes for automated systems that have a short term horizon.One other thing to make sure of is whether your broker takes the other side of your trade ,you can ask him in most cases he will tell you but there are other ways to find out if he doesn’t.
5.Communication- One thing that a proper forex broker will have is a good customer services department that means that they are not just focused on new clients but helping existing clients achieve success .Brokers who do the random cold call and high pressure sales techniques never cut it with me because in most case they need to bring in more clients because their current client base keeps falling over whether from trading account manipulation or lack of communication
hope these help check out my next blog on how to choose a forex trading strategy and stick with it