Most investors who trade Forex stocks use a forex broker. A broker is an individual or a company, who buys and sells stocks according to the investor’s wishes. Brokers earn money by collecting commissions or fees for their services.
How to Choose A Forex Broker
We should check that a broker is registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud or abusive trade practices. A Forex broker also needs to be associated with a financial institution, such as a bank in order to provide funds for margin trading. Picking the right Forex broker for us will take some work on our part. There are brokers who charge a flat fee and some that charge commission. It may be a good idea to talk with friends and business associates about their brokers.
Choosing a good forex broker is one of the most important decisions you need to make at the beginning (or at any point) of your forex trading career. Do not take this decision lightly, but at the same time don’t stress over it – the process does not need to be complicated – just like in your trading decisions, once you do your homework, things tend to fall into place. Chance favors the prepared trader and everything you need to make an informed decision is listed right here.
All you have to do is follow the advice given and you will find yourself a broker that suits your needs. The first thing you need to do is check whether the broker is regulated. The fact that the forex market itself is not regulated opens the door to a lot of possibilities for a scheming mind. There are shifty brokers out there, ranging from outright scams to just badly run businesses which are not accountable to any regulatory body. The brokers who are regulated choose to be so, in order to add a layer of legitimacy to their reputation.
Please do NOT fund any accounts with an unregulated forex broker. There are not many good reason to do so, and plenty of reasons not to. It just makes sense. All forex brokers nowadays offer traders the ability to test their trading platform with a demo account. Before funding a real account, it is highly recommended that you do this. It will give you an idea of how the platform performs.
Finally, when it comes to trading style, some forex brokers have a much wider range of tradable instruments than others. In addition to the major currency pairs, some brokers allow you to trade exotic pairs . You may or may not find these of interest, but if you do, then going with a forex broker where you can trade your desired instruments is a must.