You need to understand many things to do with forex trading before you can start on the actual trading. If you are not ready and go ahead and open a forex account, in a short while you will lose all your money. You, therefore, need to look at the main important qualities a forex broker possesses. This will guide you in selecting the best forex brokers. This will be your guide in deciding which one to pen an account with.
You need to think of things like forex margin, forex leverage, ECN forex and forex spread. You can as an example analyze the margin offered by the forex brokers. If you have a 2% leverage that means you can leverage your money 50 times. This seems to be the current maximum one can leverage.
Not many of the forex brokers took this news well, and most have decided to go trace in foreign markets, where there is not such limitation. You need to read through the review sites to find more information regarding this matter so as to find the best places to trade. You have to be very careful where the safety of your money is concerned. Ensure there are adequate regulations that safeguard your money in case the brokers go bankrupt.
You have to establish whether the brokers are market makers or use ECN. This information shall prove rather critical. A forex broker with a dealing desk can trade against our positions. ECN brokers are attractive when you think of this. On the other hand, ECN brokers can turn out to be costly if they charge a commission or each trade. You therefore have to find a way to balance between these two, to get the most out of the situation.
You need to examine the forex spread. When you notice A LOW spread, you will be in luck since you will not incur huge commissions. ECN forex brokers offer very low spreads since their platforms can tap into a huge pool of liquidity providers. You also have to determine whether the spreads are fixed or variable. Those who have variable spreads normally experience wider fluctuations whenever there are major economic news releases. Spillage can occur, where you order is filled at a price that is not what you were expecting. You need to gauge the levels of spillage that may occur.
These are things you need to consider when analyzing potential forex brokers. You also need to find out if they offer demo and micro accounts to practice real trading on. This is critical for beginners. After then can they use standard accounts.