You need to understand many things to do with forex trading before you can start on the actual trading. If you are not ready and go ahead and open a forex account, in a short while you will lose all your money. You, therefore, need to look at the main important qualities a forex broker possesses. This will guide you in selecting the best forex brokers. This will be your guide in deciding which one to pen an account with.
You have to think of criteria like forex margin, forex leverage, ECN forex and forex spread. You can as an example analyze the margin offered by the forex brokers. If you have a 2% leverage that means you can leverage your money 50 times. This seems to be the current maximum one can leverage.
Not many of the forex brokers took this news well, and most have decided to go trace in foreign markets, where there is not such limitation. Look for review sites so that you can find out the best places to trade. You need also to be especially vigilant when it comes to the safety of your money. You need to see what rules have been put in place to ensure you do not lose any of our money if a broker declares bankruptcy.
Find tout id the brokers are market makers or use ECN. This information shall prove rather critical. A forex broker who runs a dealing desk can trade against your positions. ECN brokers are attractive when you think of this. On the other hand, ECN brokers can turn out to be costly if they charge a commission or each trade. You are now forced to balance your options, between the market makers and ECN.
You need to examine the forex spread. Where there is a low spread, it is to your advantage, since you will not be charged huge commissions. ECN forex brokers usually give very low spreads, because their platforms can tap into a huge pool of liquidity providers. You will also need to see if the spreads are fixed or variable. Variable spread situations usually mean there are wider fluctuations any time there is a major financial news announcements. Spillage is another thing to think about, where your order is filled at a price that is not what you were expecting. You need to have an idea of the kind of spillage that might occur.
You need to look at such things when you are selecting a forex broker. You also need to access a demo and micro account for you to practice on. Those who are new to forex trading need to use these accounts first. After then can they use standard accounts.