Those who are new to Forex trading have the least idea about Forex brokers because they think that all brokers are the same. But this is not true, because even if you have opted for a comfortable trading strategy, there are many brokers out there who are ready to rob you of your cash, and newbie’s are an easy target.
Therefore, the question arises how do you choose the right broker for your trading? For this you have to know a bit of the market dynamics. Remember, the Forex market is totally decentralized. This means there is no centralized location for recording and tracing transactions. It is the largest banks of the world who act as the market makers for the currency market.
These banks carry out dealings in between each other regularly, hence the term ‘interbank market’. Consequently for dealing directly with these large banks you have to set up credit relationships with them which require a good deal of money which most people cannot afford.
This is where the retail brokers come in; as they connect you with the large banks. Since they represent many clients, they have adequate equity to create credit relationships and deal with these banks, on your behalf and so they can easily exploit the investors.
If you want to avoid being exploited by some unscrupulous brokers then here are some of the attributes that you should seriously consider while opting for a broker for carrying out your Forex trading.
1. The broker should be registered and have a good reputation in the industry.
2. They should offer variable spreads that reveal the volatility at interbank level
3. Brokerage firms that charge commission instead of a flat spread are more secure as it is in their interest that you continue to make profitable trades with their help.
4. Offer efficient and friendly customer service.
5. Insure your capital in a secure bond as it will protect your funds in case the broker goes bankrupt.
6. Offer realistic and modest margin/ leverage.
These are basically some of the attributes that will go a long way in helping you to choose the right broker for your Forex trading, though in addition checking and making an online search and comparison, going through the user reviews will in addition help you in your efforts.