When you decide to start trading within the forex market, naturally, there are many important factors to consider. These are likely to include setting your trade budget, and figuring out exactly what markets you wish to trade in when you are getting started. The very first port of call however, should be to choose your broker. This forex broker is the company who should be able to facilitate your every need when trading forex, a central hub for your trading career.
This includes platforms, education, markets, analysis, and many other elements. This is why choosing your forex broker is perhaps the most important step of the entire process.
Different Types of Forex Brokers
When engaging in forex online trading, you will notice there is no single type of broker. With this variety types comes your first important choice. Therefore, here is a brief rundown on the types of broker you will encounter when forex currency trading.
This type of broker, also known as a market-maker are an independent broker type who are literally making their own market positions and spreads. They are effectively betting against the trader, acting as a counter party. Many of the best forex deals can be made through this type of broker, since they decide their own market spread. Though, on the negative side, the spread can be variable, and due to the nature of the relationship, it is difficult to say a traders best interests are at heart.
No Dealing Desk
This is a common operational model among many forex brokers. In these cases, the forex company provides direct quotes from forex liquidity providers to traders. This allows for easy forex trading with just a minimal commission or marginal spread added to the rates.
STP or Straight-Through-Processing, is a form of no dealing desk broker where the broker forwards the trade directly to the interbank market to be filled with the best available quote. Typically these will be commission free trades with an additional spread added by the broker. These spreads can vary depending on the type of forex trading account you hold with the broker.
What Else to Look for in Your Broker
Regardless of the broker type, the best forex broker is usually given that tag based on a combination of their other features.
Ensure that your broker is using the best available online forex trading platform. There are many in this category, and some brokers may have excellent proprietary trading platforms, however, many experienced traders prefer the likes of MetaTrader 4 to be offered. This is among the most highly respected in the industry. It is offered widely by the likes of top broker TradeFW who have also integrated trusted web-and mobile based platforms from MT4.
This type of platform will allow you the best of professional and analytical tools as well as an intuitive user interface and extensive user guides to lessen the learning curve.
When identifying the best currency trading company to open an account with, one key consideration you should include is in relation to compliance. In order to ensure complete security and transparency for your funds, it is worth going for a broker who is regulated by one of the top financial bodies in the world. These include CySEC, as is the case with TradeFW, the FCA in the UK, or ASIC in Australia.
These are some of the most stringent world regulatory bodies covering the forex sector, so you can be sure that everything is highly above board if your broker is regulated by one of these authorities.
Experience and Reputation
A final factor to consider is an obvious one. That is, the existing reputation of a broker. This can be easily determined by a quick look at some forex reviews, or a search of the broker’s homepage. When choosing a broker, especially if you and new and favor trading sites for beginners to learn the industry, nothing beats experience.
A top forex broker with some experience, has been around the block many times, and knows how to provide just the right guidance to best facilitate success in a new trader. A very important element of this guidance will come from having a strong range of educational materials available. This can often be one of the first signs of a high quality forex broker.
Ultimately, there are a vast number of forex trading firms you can choose from. Unfortunately, all are not created equal, and that is why you should perform careful due diligence before deciding on your choice of broker.
Taking into account all of the above factors however, and coupled with a long and studious visit to the forex broker website in question, and you should be very well prepared to make an informed decision on your next step in the forex trading world.