Forex trading, or trading in foreign exchange, is now a 4 trillion industry that is increasingly attracting more and more traders from the world over. However, the fact that there are hundreds of Forex brokers and trading platforms to choose from is daunting for new entrants into the industry. Go through the Forex Broker Reviews to know about the various brokers in the industry.
Forex brokerage is a relatively new service in the financial services sector. A good Forex broker service provides new traders with sound guidance and helps them make the most of market opportunities. However, with more and more broker services coming into existence, it has become quite challenging for inexperienced traders to choose the right Forex broker. The following reviews list contains an evaluation of some of the best and most reputed online broker firms which are known to provide their clients with honest and competent services.
Based on our research and your reviews our top recommendation for 2012 iseToro
While Forex trading is undoubtedly a lucrative business, it has its fair share of risks. Bad Forex brokers are of the major problems in this field. While there are good brokers, there are also some that only aim to fleece money out of unsuspecting new traders. This tends to discourage many budding investors and traders in foreign currencies. Recently, various researches have been conducted to draw up a list of the most reliable online Forex brokers in the market. These include big names like eToro, , FOREX-METAL and HotForex.
If you are looking for a good broker to help you start out with Forex trade, you should check the credibility of the company.
Find out whether it has just started or has been in business for quite some time
Look into the spreads and commissions that it offers
Check whether or not it has a 24-hours customer support
Know whether the firm offers market alerts through emails, SMS or phone calls
You should also know about its terms of regulation. Find out whether its services are monitored by an independent regulating authority. This will help you know whether or not you can expect safe and honest services.
Before you enlist the services of a Forex broker firm, try to know how long it has been in business. The older it is the better and more reliable its services are likely to be. You can check the date of establishment of Forex broker firms from the web or directly ask about it from their customer service. If the company has just started its operations, it is best to look for other firms. It can be a potential rip off merchant. Newer broker firms often turn out to be fraud organizations that aim to make quick money and shut down without notice. These often make attractive offers to unsuspecting clients with the sole intention of robbing them.
It refers to the least amount of money that has to be deposited to open a standard trading account at any of the Forex broker company. These days, most broker firms offer a low deposit rate and an attractive welcome bonus to encourage new traders to indulge in Forex trading. In many cases, the higher the money you deposit the more features you are likely to access. The dealing spreads are also likely to get tighter. Make a careful research about your broker before you make a deposit.
Many brokers offer various options to make initial deposits, such as wire transfers, credit cards, PayPal, NeTeller etc. Competent firms tend to offer a wide range of options to their clients. Try to go for one that provides you with around 10 options. The size of the deposit tends to vary from one firm to another. On an average, it usually costs between $50 and 500 for a mini account and around $1,000-2,000 for opening standard accounts. It is better to start with a smaller initial deposit as it will reduce your risk of making a loss.
Leverage means the position that you are entitled to control with an allocated sum of money. Using more leverage can help you make larger gains. It can also increase your risk and actually make you suffer a monetary loss. Naturally, it is important to use your leverage with caution and keep away from trading activities greater than your means can permit. Presently, Forex brokers offer high enough leverage rates of 500 to 1. This means you can use only $100 from your portfolio to operate a trading position worth $50,000. In the United States, the maximum leverage is 20:1 for minors and 50:1 for majors.
In Forex trading, the term Spreads refers to the variation between the bid price and the offer price for a specific currency pair. Ideally, it should not be more than 5 pips in the major crosses. Wider spreads are frequently detected in exotic currencies and minor crosses. If an account does not involve competitive dealing spreads, most day trading plans are likely to fail over a period of time.
Generally, lower and fixed spreads are better. Make a thorough research on your brokers website to know how much spreads are charged. Compare the rates to know which broker offers the most competitive spreads.
The term trade size refers to the size of your trading account. In other words, it means the amount of money that you have in your account and the amount of pips that you want to risk in trade. Pip is a percentage or fraction of your total account. For ex, if you are having a micro lot and transacting on a pair based on dollars, 1 pip would measure 10 cents. If you are trading in mini lots, each pip would be equal to about $1 for the same transaction.
You have to keep your trade size in mind every time you plan to make a transaction. You have to set your profit and loss limit before each trade.
It refers to the currency pairs used in Forex trading. This type of trading is always carried out in pairs. A trader sells a currency and buys another. The difference in the amounts traded is the profit for the trader. For ex, Euro is traded against dollar when the value of the former is found to have a relative rise over the latter. US Dollar and the Japanese Yen (USD/JPY), Euro and US Dollar (EUR/USD) and British Pound and US Dollar (GBP/USD) are some of the most commonly traded currency pairs. New traders should start transactions with two pairs only. As they gain in confidence and experience, they can gradually add on more pairs to their portfolio. It is better for new traders to trade in limited pairs to minimize risk of losing focus and making losses.
Having more currency pairs allow you with the chance to make greater profits. Make sure that your Forex broker offers you all the currency pairs that you might be interested to trade in at a later time. If you are interested to trade in oil, gold, silver or other precious commodities, try to know whether your broker firm includes those in its ambit.
A demo account (also known as Practice account) allows you to try out the platform of your chosen Forex broker and does not require any monetary deposit. This helps you get adept in Forex trading without putting any money into trading activities. You can open a real account once you have gained enough experience in conducting trades in currency pairs and using the platform supplied to you by your broker. Traders can easily upgrade to a standard account from their demo versions once they feel they have the necessary trading experience. However, you have to deposit a minimum amount of money once you decide to open a live trading account.
Apart from a demo and a standard account, most brokers offer three other types of trading accounts. These include amini accountthat requires posting a low initial deposit. It is intended for new traders. There are also VIP accounts that are for more experienced traders. These require posting larger deposits as initial capital.
A good broker is crucial to the success of Forex trading. It is essential to choose a good broker if you are serious about trading in foreign currencies. Ask the necessary questions to your Forex broker and determine whether or not it meets all criteria before actually hiring its services. You should also go throughdetailed reviews of various brokersin reputed forums and websites to be doubly sure. Beware of scams, newly launched broker firms and those with questionable reputation. An honest, effective broker can be the first step towards a successful career in Forex trading. Make sure that you gain a firm foothold as you step into this lucrative yet risky business.
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