Tips For Picking The Right Forex Broker
Every day, trillions of dollars are traded on the Forex market. If you are interested in entering this market, the best way to proceed is with the assistance of an experienced broker.
There are quite a few brokers out there offering their services to you, so you need to be cautious.
Choosing the right broker can help you earn a sizable return in the market, but the wrong choice can cost you your savings. Keep these tips in mind so that you can make a wise decision.
Reputable brokers need to belong to the proper professional organizations and be registered with the appropriate government agency. The National Futures Association, or NFA, is a professional group that works to ensure that traders and brokers behave with integrity and follow appropriate principles.
The Commodity Futures Trading Commission, or CFTC, is the government agency that regulates various markets, including the foreign exchange market. A reputable broker should be registered with this agency and advertise this fact on his website. Be sure to ask about this before hiring a broker.
Pay attention to a broker’s leverage when you are choosing one. Leverage is a ratio that measures the relationship between the size of an investor’s account and the value of his position in the market. For example, leverage of 75:1 means that an investor with $2,000 in the bank can hold a position worth up to $150,000.
While leverage helps to increase an investor’s profits, it can also work to magnify any potential losses. Because of this increased risk, it should be used with caution. Discuss leverage with a broker to see what his advice is, and be wary of a broker who tries to push you to accept greater leverage.
In many cases, you can open a Forex account with a small deposit, often as little as $100 or so. By making proper use of leverage, even such a small deposit can result in significant gains. This is one reason why the Forex market appeals to many beginning investors.
Since the Forex market is open for business at all hours, you need to look for a broker who offers customer service and assistance 24 hours a day. Find out how quickly you can reach an actual human being. Give the broker a call and see how easy it is to use their customer service system and how readily you can reach a person. You do not want to have to spend hours on the phone to get the help you need.
Different brokers offer different currency pairs that you can trade in, so make sure that you choose a broker who offers the ones that you are interested in. Some pairs are more popular than others, such as the dollar and the yen, and the pound and the dollar. Check with the broker first to see what sort of selection is available.
The services of a good Forex broker can really enhance your chances of earning a solid return in the market. Keep these tips in mind when you are shopping for such a professional.