Guide to Choosing a Forex BrokerBefore you decide which forex broker to entrust your funds with, consider the following: 1. Location, Location, Location Always find out where your forex broker is located. It was not fun when I decided to open a forex account with an offshore forex broker in order to evade the tax man. All was great until I needed to withdraw funds. How do you withdraw funds from a company that is located in Belize, with no real physical address and the laws are shady? 2. Forex Regulation Along with location comes regulation. There once was a company called Refco, with a great reputation that closed its doors leaving many traders, including yours truly, out of profit. Ofcourse, as is the nature of these things, the government could do nothing about it as the forex market was not regulated at that time. While futures traders who belonged to Refco were getting their refunds, the rest of forex traders had to undergo pain to get our funds back. The Futures Commission Merchant (FCM), the Commodity Futures Trading Commission (CFTC) and the NFA are now working to regulate forex brokers based in the USA. If you are in the UK, the FSA should guide you in choosing your broker too. If the forex broker is not a member of any of these above organizations, then walk, actually no...run in the other direction! For a full list of these organizations visit the forex regulatory agencies page. 3. Forex Trading Platform Imagine importing a Ferrari Spider straight from Europe to the USA. The only problem is that it is not easy to drive a right hand drive car in a left hand drive car environment. That Ferrari becomes a costly pain to drive. The forex trading platform provided by your forex broker should be easy to use. I once had an online platform that had great charts but would sometimes just freeze whenever a request to close the position was done...that locked out hundreds of dollars worth of profits. One of the reasons there are demo accounts is so for the user to experience the platform's look and feel. If the platform performs poorly then return your 'Ferrari' and find another trading platform that respects you as the user. This is one key criteria in choosing a forex broker. 4. Forex Trading Spreads A collegue of mine used to make the same trades at the same time using the same trading system as myself. Even though the trades were executed at the same time with only minimal price differences, I always made more money than he did at the end of the month. After some time it was discovered that my broker was offering me a spread of 3 pips (points) on my trades while his broker was offering him a spread of 5 pips. In effect for every trade we made, I was making 20 dollars more than him. That added up to more than $2000 than him at the end of the month. Every pip adds up! 5. Customer Service These are the golden rules: 1. If I can not find someone to call when there is a problem, then I do not deal with such a forex broker. 2. If a forex broker does not have a dealing desk where I can place my trades over the phone, I am also not interested in dealing with such a broker. 3. Give several brokers a try and see which one gets back to you the fastest 4. Forex market operates 24 hours a day so ensure the broker operates round the clock as well. It would be crazy if the customer services is only available at certain times when you are dealing with hard cash that is active in a 24 hour market A company without good customer service is a company that does not care about you and so you too should not care about it. Whatever you do, make sure that your funds are safe by remembering the points discussed in this 'guide to choosing a forex broker'. Related Articles: Beating Floor Traders At Other Own Game!
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