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Sunday, 24 June 2012

Compare Forex Brokers

Some Factors to Consider in Comparing Forex Brokers

When you will decide to start the trading on forex, the first task faced by you is to compare forex brokers to choose the right broker for your trade. The success of the traders in forex is directly connected with the scope of facilities provided by the broker. There are no fixed rules for the comparison of forex brokers but one thing that you must concentrate on is the proper research and the study of important indicators.

Here are some tips about important indicators which provides you help in choosing the right broker. You can also assign weights to every indicator and then give marks according to the facilities provided by the broker.

1. Minimum deposit to start:

Most people don't want to participate in risk at the beginning of their business. The start up cost of forex business must be low. This helps the small traders to enter in the market. The tolerance level of trader decides the level of capital invested in the business because a person invests according to his tolerance limit of risk.

2. Broker's commission:

Usually in forex market, the brokers charge you a commission for every trade not on the basis of information provided by you. Low commission will results in higher profits. In the comparison of forex brokers, commission can be an important decision variable.

3. Spreads:

Difference between the buying and selling price is called the spread for that trade. The lower spread will increase your chances of success because it allows trading more lots. The larger the spread, the lesser the amount that you get. Ideal spread is between 2-5 pips.

4. Leverage:

The trader decides its leverage according to his nature. Leverage is the amount of return and the risk which you are ready to take. It follows high risk; high return principle. If a broker is offering high leverage that mean the gain on your investment is high but it involves a great risk. So to compare forex brokers consider the leverage on the basis of your risk bearing power.

5. Software support:

Many brokers provide software support to their traders which help them to keep in touch with the market. A good forex broker always provide software support to its customers according to their behavior and trading needs.

6. Currency pairs offered by the brokers:

In forex trading you can trade in many currencies. You can also choose your home currency for trade because you have greater knowledge of it. But the brokers who allow you to trade in a currency pair much which are more volatile are always ranked high among others.

7. Minimum trading size allowed by brokers:

Again it will depend upon the nature of the trader. Some traders want to trade mini-lots, while others prefer to trade large. You can choose a broker who best suits your needs.

8. Customer support provided by broker:

Most of the traders who enter in the forex market need support and guidance's for their first trade. So to compare forex brokers, give high marks to them who provide a 24*7 support to their customers.

Summary:

Without comparing first, you may trade without all the advantages you should have, so make sure you compare a number of forex brokers before you decide on which one to use. You can use the parameters such as initial deposit, spread and leverage as your base in selecting the right broker for you.

Is the number of the brokers confused you? You can visit fxbuild.com to see the details of a recommended STP broker.

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