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A Guide to Forex Brokers

It should be made clear that there are many important concepts that need to be clear before forex trading is initiated. Those who were not ready but decided to start anyway reported huge losses in a short while. You, therefore, need to look at the main important qualities a forex broker possesses. This will be the way you select the best forex brokers. This is how you will know how to choose which one to open an account with.

You need to think of things like forex margin, forex leverage, ECN forex and forex spread. You can as an example analyze the margin offered by the forex brokers. If you have a 2% leverage that means you can leverage your money 50 times. This seems to be the current maximum one can leverage.

This imposed maximum has not been received well by forex brokers coalitions, and most have decided to trade in foreign markets, in order to beat the barrier. When it comes to this, you need to read some reviews, so as to get a better picture of where to trade. You need to be especially keen when it concerns the safety of your money. Ensure there are adequate regulations that safeguard your money in case the brokers go bankrupt.

You have to establish whether the brokers are market makers or use ECN. You will see the sense of this information. A forex broker with a dealing desk can trade against our positions. ECN brokers are attractive when you think of this. You also have to consider that ECN brokers may turn out to be more expensive, when they decide to charge a commission per each trade. You therefore have to find a way to balance between these two, to get the most out of the situation.

You need to examine the forex spread. When you notice A LOW spread, you will be in luck since you will not incur huge commissions. ECN forex brokers can afford to give very low spread due to the fact that their platforms can tap into a huge pool of liquidity providers. You need to find out also if the spreads are fixed or variable. Variable spread situations usually mean there are wider fluctuations any time there is a major financial news announcements. Spillage is another factor to consider, where your order is filled at a different price than what you were expecting. You need to have an idea of the kind of spillage that might occur.

These are things you need to consider when analyzing potential forex brokers. You also need to find out if they offer demo and micro accounts to practice real trading on. This is critical for beginners. After then can they use standard accounts.

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