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How To Choose A Forex Broker |
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| Date Added: August 31, 2011 05:14:18 PM | |
| Author: Dejan | |
| Category: Business & Economy: Finance & Investment: Stocks & Shares | |
Choosing the right broker is the most hardest thing for every serious trader. There are hundreds of brokers out there so how to choose the right one? You choose the one with the highest bonus of course. No I'm just kidding :D But this is how you think when you're a newbie trader, free bonus is the most important thing. And this is correct when you're just searching for some free no deposit bonuses. But after a while of successful trading you'll end up thinking of investing your own money into a real trading account, but you'll want the perfect trading conditions and this is not that easy to find. For some traders the most important thing is that a broker is regulated, for others the tight spreads, for the third fastest execution time and so on, but it's really hard to have it all. It's very handy if a broker offers a low free no deposit bonus on a real trading account or maybe a very low deposit requirements of 5-10$ or so, that's how you can execute a few test trades and see exactly what's the performance, execution time, spreads, slippage... It can be very disappointing when you'll finally find a broker with awesome specifications written on their homepage but when start trading you can be shocked when you get a lot of re-quotes, big slippage and horrible things like that. I'm not saying that this will never happen even with the best broker but every trader just wants best trading conditions for the most of the time. And remember that trading on demo can't be compared to trading on live. Even if both accounts have the same price feed it can be very different. You can be very profitable on demo but the same strategy can blow your real account. If you're searching for low spreads, you can choose ECN, Currenex accounts that offer very low spreads on the major pairs but, yes there's always a but :) you will have to pay commisions (3$-5$/LOT). But you have to take on mind that this commisions is calculated per side. So you buy 1Lot and then sell 1Lot, you have to pay the commision twice. So the trading specifications can be very misleading. What's better Market Maker or STP/ECN ? I would say STP/ECN type of brokers are better because market makers have a vested interest in seeing you lose money. STP/ECN brokers process your trade to the real market, big banks and other liquidity providers. But market maker has to provide liquidity to traders so they take the opposite position on every trade that you make. So this means that every time you have a nice winning trade, you take money away from your broker, and your broker will make money every time you have a losing trade. So yes you are now thinking correct, a market marker will do everything that you trade will end up like a losing trade. I'm not saying that all market markers play games like this but some do. They can delay the execution, widen the spread like crazy, force big slippage and so on.. If you notice things like that, withdraw you money and move to another broker. Is the trading platform important to you? If you're going to use expert advisors (trading robots) then I guess your answer is yes, because the most EA's are written for Meta Trader 4 and 5. Most brokers offer trading using Meta Trader platform but not all. Does the broker allow EA's or the strategy that you would trade with? Some brokers don't allow scalping, hedging or some kind of EA's. The best thing before opening an account is to chat with their support and get some information what's allowed and what isn't. Some brokers promote themselves as scalper friendly but when you make a few trades with profit of 1-2 pips in 10mins they say no no this is not allowed because this is pip hunting and bla bla bla the broker has always right and they can screw you easily if they want. I'm currently trading with two brokers: -HotForex ( FSC regulated, low floating spreads, STP, 1-2sec market execution, nice promotions, MT4) -FBS |
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