How to select a Forex broker

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Up to now you already completed three lessons.  This is the forth and one of the most important lesson. But it is a small lesson.

Let’s see who are the Forex brokers?

Forex brokers are kind of facilitators who are providing you the opportunity to access in to Foreign exchange market. For their service they charged a commission which is calculated according to the market spread of a currency pair. Spread means the difference between buying and selling values. You don’t worry to know and calculate those values. Because before you end the trade they will show you the figures. Simply you should memorize if the spread is high you have to pay more at the end of the trade. See the following example

EUR/USD     Buying value= 1.2456
                   Selling value = 1.2453

So the spread       = 1.2456 – 1.2453
                           = 3 pips

Now you know the number of pips. So now you can calculate amount of money that represent 3 pips.
Then see the factors you should consider while selecting a Forex broker. This is very very important.

1.       Security

This is the most important factor that you should consider prior to select a Forex broker. Your money should be protected. Below is a list of regulatory bodies which control the Forex brokers.

v  National Futures Association (NFA)

v  Commodity Futures Trading Commission (CFTC)

v  Financial Services Authority (FSA)

v  Australian Securities and Investment Commission (ASIC)

v  Swiss Federal Banking Commission (SFBC)

v  Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)

2.       Transaction cost

The spread should be tight and small.

3.       Deposit and withdrawal should be easy to perform

4.       Trading platform should be user friendly and easy to understand

5.       The customer service.

Consider all 5 factors before you select the Forex broker for you. All the above factors are equally important.

Even though you have selected the best Forex broker don’t go for real trading until you practice in there demo account to ensure it is working for you. So this lesson is one of the important lesson you must learn otherwise you will learn lesson from your Forex broker.
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