How To Find The Right Forex Broker? - ForexShop.net

How To Find The Right Forex Broker?

Any seasoned Forex trader will tell you that you need to have the right tools at your disposal to trade successfully. This means picking the right Forex broker and the ideal trading platform for your needs. As a trader, you want a trading platform with user-friendly, easy-to-navigate interphase, real-time data, and the flexibility to access different research tools. You cannot just sign up with the first broker you come across when getting started. Picking the right tools will help you get started on the right foot.

Forex Trading Tools and Platforms

Investors access the forex market through brokers. If you work with a good broker, you have a higher chance of trading successfully, so picking a broker will be one of the critical decisions you need to make when getting started. Consider choosing the right broker, your first trade in the forex market, and do it with the same care you would apply when entering an actual trade.

There are three main categories of brokers:

  • No Dealing Desk Broker
  • Market Makers
  • Electronic Communications Network Brokers(ECN)

No dealing Desk Forex Broker (NDD)

As the name implies, this broker does not have a dealing desk. An NDD broker typically gets quotes from various forex quote providers and offers them to their clients. Once the NDD broker has the best markets, they execute and fill orders for their clients.

This type of broker will typically charge a commission on the trades made or increase the bid/offer spread to make some profit on each trade (read more about Forex terms).

Market Makers

A market marker broker-dealer firm holds several positions on its books for a particular pair of currencies to facilitate trading in that currency pair. In this way, they take on some risks themselves. A forex market maker category of broker will provide its clients with a two-sided market created by a specialist forex trader who operates in the broker’s dealing desk. The broker, in effect, takes up the other side of any given trade. They can achieve this by selling on their offer price or buying on their bid side.

This type of broker generally obtains part of the spread and trades enough volumes on either market side. When the market marker is executing big trades, they can choose to offset the trade immediately if they predict a market move against the trade.

Electronic Communications Network Brokers

With ECN brokers, electronic communications networks give clients direct access to other traders in the currency markets. An Electronic Communications Network broker avails an online trading platform where investors can access the forex markets and execute their trades.

When you choose an ECN broker, you will make bids and offers through the online trading platform provided by the ECN broker. Since this category obtains price quotations from different market participants, they give the investors tighter spreads.

Picking the Right Forex Broker – What are your needs?

Depending on your Forex trading strategy and needs, the most appropriate broker is one who meets specific criteria.

Consider, for instance, how often you will be trading. Are you going to be a day trader or a position trader? Are you looking to trade small moves or capture more significant moves?

Online trading platforms provided by ECN brokers are the best option for day traders and investors looking to take advantage of small price moves in the market. With an ECN broker, the spreads are narrow, which will be significant when entering small trades. Similarly, if your preferred trading mode is scalp trading, an ECN broker will be ideal.

A no-dealing desk broker is the best option for active traders looking to capitalize on today’s small daily price moves. You can access the market directly, which effectively cuts out any delays that may negatively impact your trade. Working with a trading desk is more time-consuming and results in re-quotes. The time delay occasioned by re-quotes can make you lose your trading opportunity.

What does the broker offer?

As a beginner, stay away from unscrupulous brokers by ensuring that you pick a duly registered broker that operates within an adequately established and regulated financial system. It is recommended that you work with registered brokers and are governed by US, Japanese, Australian, or UK regulations.

How easily you can deposit and access your funds is also an important aspect to consider. You do not want to jump through hoops every time you want to take money out. Different brokers will offer various methods of depositing withdrawing your funds; if you are not comfortable with whatever the broker specifies, you are better off looking for an alternative. You do not want the hassle of costly and tedious transactions when you can easily find a broker with a deposit and withdrawal method that will suit your needs.

Test out the Right Forex Broker

Once you have identified the most interested brokers, the next logical step is to test out your broker. You want to ensure that the broker’s services will meet your expectations. Start by opening a demo account. A demo account is a beginner’s best friend because it allows you to make simulated trades without risking money. A demo account will also enable you to understand a broker’s trading platform and its terms and conditions. If your demo account has plenty of hitches, so will the actual trading experience.

If the demo account runs smoothly and you are satisfied with the broker’s terms and conditions, you can open a live account. For starts, deposit only part of your trading capital. You can always top up the rest later after understanding the ins and outs of how the trading platform works.

Offshore trading accounts

Offshore trading accounts are also becoming popular among investors who may want to take advantage of favorable tax treatments in other regions. In such a case, you may operate an offshore trading account. Brokers for offshore trading accounts also have varied terms and platforms available to their clients, so you will need to pick one that best suits your needs.

Here are some considerations to consider when opening an offshore trading account.

  • Consider the trading fees applicable in terms of commissions and transaction fees.
  • The minimum capital required to open and operate the offshore trading account.
  • The standard of responsiveness of the broker to queries from the customer.
  • The offshore broker should meet all regulatory standards established by the regulatory bodies, such as the CFTC (Commodity Futures Trading Commission) and the NFA (National Futures Association).

An IBC (International Business Corporation) is one of the safest methods of operating an offshore trading account. It allows you to bypass most normal reporting procedures and recoup the initial costs through savings made on taxes.

Have you already found the right forex broker? Would we like to hear more about them from you? What was crucial for you?

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      Joe Doe in London, England purchased a

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      Joe Doe in London?

      Joe Doe in London, England purchased a

      Joe Doe in London?

      Joe Doe in London, England purchased a

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