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A Guide to Forex Brokers

It should be made clear that there are many important concepts that need to be clear before forex trading is initiated. If you do not do this but go ahead and trade, you will regret that decision. You will need to know what the main important qualities to look for in a forex broker. This is how you select the best forex brokers. This will be your guide in deciding which one to pen an account with.

You have to think of criteria like forex margin, forex leverage, ECN forex and forex spread. You should begin with look at the margin offered by the forex broker. A 2% margin affords you a leverage of 50 times on your money. This seems to be the current maximum one can leverage.

This imposed maximum has not been received well by forex brokers coalitions, and most have decided to trade in foreign markets, in order to beat the barrier. When it comes to this, you need to read some reviews, so as to get a better picture of where to trade. You need also to be especially vigilant when it comes to the safety of your money. There has to be in place enough regulations that ensure you shall not lose your money hen a broker goes bankrupt.

You have to establish whether the brokers are market makers or use ECN. There is a huge impact from this information. You cannot rule out a forex broker who has a dealing desk turning against your positions. ECN brokers are attractive when you think of this. But keep in mind that ECN brokers may turn out to be too costly when they charge a commission per each trade. You will have to strike a balance between these too; to go with ECN or market maker brokers.

You need to look at what kind of forex spread there is. Where there is a low spread, it is to your advantage, since you will not be charged huge commissions. ECN forex brokers usually give very low spreads, because their platforms can tap into a huge pool of liquidity providers. You also have to determine whether the spreads are fixed or variable. The problem with variable spread is that there is always a fluctuations when a major financial news item is broadcast. Spillage is another factor to consider, where your order is filled at a different price than what you were expecting. You need to gauge the levels of spillage that may occur.

These make up the search criteria for a forex broker. You also need to access a demo and micro account for you to practice on. This is critical for beginners. After then can they use standard accounts.

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