Choosing the right Forex broker is one of the most important factors in maximizing the profits on your Forex trades. Even though most of these Forex brokers may seem similar in what they offer an investor, small difference can have a big impact on your profits. Because of this, there are a number of important things you’ll need to compare when shopping for the perfect Forex broker for your investing goals.
Best Forex Brokers
Start With the Fees
The most obvious thing to compare between brokers is their fee structure. You’ll need to know exactly how much they’ll charge you for the trades and any other restrictions a particular account may have. The fee structure may be based on a single charge for your trades or may also have additional charges based on the volume of your trade, the leverage provided by the broker and the size of your account. Most brokers will reduce or eliminate these additional fees the larger your account becomes or the longer you trade with them. The reason these fees and services are so important is that they can dramatically reduce your profits on all the trades you make. By finding a Forex broker with lower fees you are actually able to make a bigger profit from less trading in the Forex market.
The amount of leverage the various brokers offer their clients will vary as well between brokers. You’ll want to shop around to find a Forex broker that offers the best leverage to allow you to amplify your profits by controlling more stock than you actually have funded.
Do They Offer the Tools You’ll Need to Succeed
Another consideration when comparing Forex brokers is the type of trading interface they provide. All of the Forex brokers in the market need to provide a way for their clients to make trades but the way these interfaces work may limit your ability to make timely trades. At a minimum you’ll want a broker to provide a web interface that you can access from home and while you’re traveling. A nice bonus would be a dedicated application that can run on your phone. This would allow you to quickly monitor your investments and make the timely trades you need for profitability. Because Forex trading has become so widespread, several interface standards have been developed to allow you to purchase independent Forex trading and analysis programs to use for trading. You need to make sure your broker provides the proper interface for any programs you are considering to make it easier to use them.
Can you Use a Trading Program
Automated trading is becoming widely popular in recent years and many brokers frown on the activity. If you are plan to use some of this specialized software to help you make your trades you’ll need to verify that any Forex broker you are considering allows it. In many cases they may have a policy to close accounts they determine to be using the software and finding this out later can be devastating.
What to look for when choosing a Forex Broker
Finding the right broker can make all the difference in a successful Forex trading experience. Because the services and costs between Forex brokers can vary so wildly, it’s a great idea to do extensive comparisons between any brokers you’re considering before setting up your account. Knowing what factors to compare can help you find the perfect match for your investments.
Small Lot Sizes
Locating a Forex broker that offers smaller lot sizes for your trades will allow you to keep a tighter control over your investments. While most brokers prefer larger lot sizes of 100,000, many brokers offer mini and micro accounts with smaller lot sizes of 10,000 or even 1,000. Having the flexibility to trade in smaller lots will let you grow your account with less risk over time.
Understand the Leverage
Because your profits in Forex are based on very small movement in the price of a currency, having the ability to use leverage to increase your position is essential. The amount of leverage that various brokers offer can be very different and you’ll need to find a broker that not only offers the best leverage for new accounts but will also increase this leverage as you develop a trading relationship with them over time. Having this leverage at your disposal will enable you to amplify the profits of your investments quickly without needing the equity in your account.
Fast Trades Are a Must
Having a broker that offers all the advantages you think you need but is slower than others when executing your orders can be devastating. The price of currency changes very quickly and for you to make the trades that are the most profitable, you’ll need a broker that can execute your order immediately. Any delay can cost you money since the value of the currency might have changed between the time you placed your order and when it was executed. This may be the single most important reason to choose one broker over another as it can affect every trade you make.
Sophisticated Investment Tools
In addition to offering leverage on your account and executing your trades for you, a good broker will also provide the investment tools you need to make the right choices. These tools should include historical charts for currency prices as well as live feeds on current pricing. In addition, many brokers offer daily advice on what currency pairs could be right for your investment goals. This can help you choose the best timing and currency for your investments without extensive analysis on your part.
Many of the larger brokers also provide a trading dashboard that makes researching and placing your trades easier. This dashboard may also include updates on currency pricing as well as other account information you’ll need for your trades. Utilizing a sophisticated interface like this will make it easier for you to trade when you’re away from your computer and picking your trades remotely. By being able to access your account from anywhere, on any device, you’ll always be on top of your investments.