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Most investors who trade Forex stocks use a broker. A
broker is an individual or a company, who buys and sells stocks according
to the investor's wishes. Brokers earn money by collecting commissions or
fees for their services.
You should check that a broker is registered as a Futures Commission
Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as
protection against fraud or abusive trade practices. A Forex broker also
needs to be associated with a financial institution, such as a bank in
order to provide funds for margin trading. Picking the right Forex broker
for you will take some work on your part. There are brokers who charge a
flat fee and some that charge commission. It may be a good idea to talk
with friends and business associates about their brokers. You may get some
good leads, and you're certain to hear who to stay away from. There is
nothing like word of mouth advertising.
If you are thinking of investing online, you could choose several online
brokers and contact their help desks. Seeing how quickly they respond to
your questions could be key in how they will respond to their customers
needs. If you don't get a speedy reply and a satisfactory answer to your
question you certainly wouldn't want to trust them with your business.
Just be aware that as in other types of businesses, pre sales service
might be better than after sales service.
Before you choose an online broker get a copy of their online demo
account. What features are included? Is the software reliable? Does it
offer automatic trading? Are there extra software features that cost more?
Before setting up an account with a Forex broker you will need to do
further investigation. How quickly will these brokers execute your
buy/sell orders? What is their policy on slippage? What are the
transaction fees? What is the spread, fixed or variable? What are the
margin requirements and how are they calculated? Does the margin change
with currency traded? Is it the same for mini accounts and standard
accounts?
Don't forget to ask about minimum account balances and interest payments
on account balances. Make sure that your funds will be insured. |
