There are all sorts of Forex brokers out on the web, but most of them offer pretty much the same selection of currency pairs. If the brokers you are looking at fall into this category, then how do you narrow down your choices? There are still a few things that you should be looking at, but the big three are the spread rate on the currencies you will be trading, the ability to automate your trading, and the levels of customer service being given. These factors each need a little explanation.
The spread is the gap between the bid price and the ask price. Basically, there is a difference between the amount you spend to buy a pair and the amount you are given when you sell. The difference is usually only a few pips, and although this is a fraction of a penny, it makes a big difference when dealing with large amounts over a long period of time. A competitive rate is usually around 5 to 7 pips, but even within the same broker, this can vary from currency to currency. Usually, the most popular currency pairs have higher spreads in order to make more money for the broker. This is a common practice, but you don’t need to let it hurt you. First, make sure that you are getting the best rate you can find. There’s no point in going with a broker that has a 6 pip spread on EUR/USD if you can find a broker that gives you 4 pips. On paper, it’s only 2 percent of a penny’s difference, but it can equal thousands of dollars or more over the course of a year. Think about it this way: 2 pips with a $10,000 trade equals $2. Not a lot, right? But now conduct 1,000 of these trades over the course of a year. That’s about three trades per day, which is actually a very small number. It equals the difference of $2,000 in profits every year.
Being able to apply trading robots to your Forex account is a very powerful option for many. It allows you to keep trading whenever you need to, even if you aren’t actually sitting down trading. Most major brokers allow you to do this, but you need to make sure first. The most widely used tool here is MetaTrader 4, so make sure that this software is applicable to your broker before you create an account. This will open up many doors to your trading, including robots, expert advisors, and advanced technical indicators and tools.
This is something that you never really want to need, but you probably will at some point in your career. Pretty much, you want a team that is going to help you make money and not just take it away from you. Some brokers will even give you a personal trading coach if you have a large enough account. If this is something you are interested in, make sure you can get access to it without a big hassle. Brokers know that when you make money, they make money, too, so this is something that most brokers are moving toward improving upon with their sites.