Tilt the Odds in Your Favor by Choosing Among the Best Forex Brokers
It is important to be aware that there are many essential concepts to understand before trading with real money. If you don't do your homework but open a real forex account, it will not take long before you blow up all your funds.In the following paragraphs, we shall consider some key qualities which generally the best forex brokers possess.So the point is to realize what factors are important to look at when making a best forex brokers list. After performing this process, you can then choose one of them to open a live trading account.
In drawing your list, the factors that you will have to closely consider are forex margin, forex leverage, ECN forex and the forex spread. As an example, you will need to look at the margin offered by the forex brokers. Usually, a margin of 2% implies that you will be able to leverage your money by 50 times.On 30th August 2010, the CFTC which regulates retail forex in the US has decided to reduce leverage to 50:1 for major currency pairs. This means that the margin available with US forex brokers for major currency pairs will now be restricted to 2%.
This rule has been vehemently opposed by the coalition of forex brokers and many of them now offer trading accounts in other jurisdictions as a way to circumvent the over-bearing regulations in the US. Also, many forex brokers review sites now recommend to trade in the UK. What you can do is browse these reviews sites for maximum information, bearing in mind that they might be biased, and then decide whether to open a forex trading account in the US or abroad.But that is not all. You will also need to find if there are relevant regulations in place to protect your money in case the brokers go bankrupt.
The next step is to inquire whether the brokers are market makers or use ECN? This will make a real difference as you will come to appreciate. Indeed, this is crucial because a forex broker who operates a dealing desk can trade against your positions. This is why ECN brokers are preferred. However, ECN brokers can at times be costly if they charge a commission on each trade. Will you then prefer to open a trading account with a broker who has a dealing desk? As you can see, this process constantly requires you to balance the pros and cons.
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