ForexNewsNow – Foreign exchange brokers come in a wide variety, from banks and large financial institutions that handle international companies’ foreign exchange transactions, to the online forex broker executing retail online forex transactions for thousands of customers.
Online foreign exchange brokers can be highly reputable, well run and regulated companies with excellent customer support handling thousands of satisfied customers. On the other side of the coin, some online foreign exchange brokers can be engaging in questionable practices in order execution with some brokers being a complete fraud seeking only to deprive the unwitting out of their money.
The best way to avoid problems with your online forex broker before starting up your trading business is to select the best broker possible for your needs. This entails doing a certain amount of research and perhaps opening various demo accounts to find the most suitable candidate.
Avoiding Problems with Your Broker
Having as much information about your prospective broker and the type of online trading account you will be trading in can save you an enormous amount of frustration and money in the long run. Choosing an online forex broker with a good reputation and a no-requote policy would be optimal.
Also, keep in mind all of the trading tools such as charting software and a news feed, that you might require for your trading. Check the broker’s trading platform to make sure that these tools will be available to you.
Make sure that you familiarize yourself with everything about your prospective account such as margin requirements, lot sizes, leverage and the broker’s policies on closing out trades before committing your funds. Also, be clear on the broker’s policies for withdrawal of funds, you don’t want to lose immediate access to your money.
Read over all the paperwork before committing your funds as you would any formal contract and especially the fine print. Once you feel completely comfortable with the terms and conditions you can open your online trading account with confidence.
Researching a Forex Broker Online
An excellent way of avoiding future problems with a prospective online forex broker is to visit online forums which specialize in evaluating forex brokers. If the broker has had problems with clients in the past, then the broker’s clients would be very likely to post their grievances on a forex forum.
Nevertheless, caution should be observed because many novice traders that lose money trading forex have a tendency to blame their brokers for their losses.
Several unethical broker practices that would be a red flag to opening an online trading account would include:
- Front running – buying or selling for their own account ahead of a customer’s order.
- Stop hunting – looking for price levels where a large number of stop orders can be triggered.
- Re-quoting – not executing orders in volatile markets and instead giving the client a “re-quote” of a worse price.
- Excessive Slippage – extremely unfavorable execution prices on stop loss orders.
Trading Through the Best Online Forex Broker
Trading through the best broker depends largely on the particular needs of each individual trader when actively trading in the forex market. While some brokers offer better dealing spreads but less features on their trading platform which would suit a seasoned trader, others offer more features but have higher dealing spreads.
Having an online trading account with a reputable and reliable forex broker could make the difference between a profitable account and a highly profitable account. Remember, your broker is also your business partner.