There are currently numerous types of Forex trading brokers out there to select from. All these brokers offer different types of services with regards to the services they can provide to clients. So what are some of these things that a potential Forex trader should take into consideration before engaging in any transactions through them?
The first thing is to check if the Forex trading brokers you plan to engage in will be allowing you to carry out a demo account. A demo account can be likened to practicing on a real platform. It allows a trader to perfect his/her skills on how to make successful trades using real money. With a demo account, a new trader can learn to make use of the available tools available in the Forex platform. As such, having a demo account can help improve your skills and knowledge about how to operate the platform.
Next, you need to look for an online trading firm that will allow you to make a minimal deposit. The minimum deposit is usually just a few dollars, which is not really that much by just starting in the market. If you aim to have more funds to spend, then an interactive broker may be able to offer higher deposits. This is due to the fact that with an interactive broker, your trades will usually be subject to higher risk and hence, higher profits as well.
Lastly, ensure that the Forex broker you intend to choose will allow you to have multiple accounts. Having multiple trading accounts allows traders to execute trades across multiple currency pairs at the same time. Some brokers allow traders to open a small account using just cash, while others will let traders have unlimited accounts using their trading platforms. Note that traders who have multiple accounts will also have the opportunity to gain bigger profits as compared to those who only have one account.
Next, ensure that you will be allowed to set up discount brokers. Discount brokers are usually paid by the clients on a commission-basis. However, some of them will allow clients to set up unlimited account levels with their platforms. As a trader, you will therefore have the advantage of being able to adjust your discount rate depending on your individual needs. Note that if you wish to trade on major pairs exclusively, it is advisable that you opt for higher discount brokers.
The next factor you need to consider is whether or not you can use technical analysis with your forex trading. Even though some people still think that it is unfeasible, it is actually very easy for traders to learn how to make use of technical analysis. The most common technical indicators used by Forex traders are RSI, trend lines, moving averages convergence divergence. If you have been instructed to follow a certain strategy by your broker, it is advisable that you stick to the strategy even if it does not work out to be a winner.
The last factor you need to check on when choosing between a regulated and unregulated forex broker means you need to check on the registration status. Although the majority of brokerages are registered under the CFTC, not all of them are. The best way to find out whether a broker is registered under the CFTC is to log on to their website and check out the information there.
When looking for a new platform to trade on, one of the main things traders look for is whether the platform offers a trading account. Remember, it is crucial that the platform has a trading account as this is what traders will use to fund their trades. Whether a broker allows traders to deposit funds directly into their trading account or whether it requires them to use a deposit, is usually the deciding factor of whether or not traders will trade with that broker.