Getting to start trading forex is not an easy step. But before getting your hands dirty, you might want to set your foot right before even taking that first step. That would be choosing a broker. What is a broker? Please do a little homework and study before coming back to this article. No hard feelings but that's the least you can do for yourself if you want to take on this journey: a lot of hard work and research.
Ready? You know what a broker is by now? Google can't be that disappointing, right?
Okay, so choosing a broker, here are 5 key factors to look at before choosing one.
1) Is the broker regulated?
Some countries do not have regulatory licensing requirements while others do, but overall, it is definitely wiser to trade with them than with an unregulated broker. (However, there are still quality brokers out there that are unregulated!)
2) Does the broker have a dealing desk?
If it does, then it means that the broker is a "market maker", then it means that every time you lose on a trade, the broker wins, therefore your best interests aren't necessarily theirs. (Again, there are plenty of good brokers that have dealing desks, but it's nice to know all the facts before opening a trading account.)
3) Does the broker allow scalping?
Some forex brokers do not allow scalping as it takes more resources on their end to manage numerous small transactions that only last a few minutes. Make sure that your style of trading is allowed by the brokers you are looking at.
4) Is the spread really that important?
Some brokers offer super low spreads, but they lack other features and benefits, while some brokers have spreads that are considered average but they have all the bells and whistles that your trading style requires. If you are a scalper, then you should be seeking out those brokers who offer low spreads for the frequent trades you will be making, but if you are a swing trader that only places 2 or 3 trades per week, with the objective of making 100+ pips per trade, then the difference between a 2 pip spread and a 3 pip spread is not really all that important.
5) Does the broker provide managed accounts?
Managed accounts are great for two reasons: when you're starting out, you may prefer to let others (with a proven track record) do the trading for you. These forex account managers, commonly referred to as signal providers, use different trading techniques, but they always have a track record which you can look over and a description of the type of strategy they are using.
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