Forex Brokers

Unless you are a multinational bank, you need a Forex broker to handle your Forex transactions. Forex brokers are the middlemen between the individual investor and the foreign exchange market, so in order to participate in the Forex market, you need to establish an account with a Forex broker.

Forex brokers are associated with large financial institutions which provide the funds for a margin trading. Each Forex broker in the United States must be registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM).

Most Forex brokers operate on the Internet, although some may also take trade orders by telephone. There are hundreds of online Forex brokers, so it can be difficult for the average investor to choose an online Forex broker.

It is important to research the market to find a reputable online Forex broker. You will see that various Forex brokers offer a range of services and fees, so you need to find one that provides the services that you require.

Talk to friends and colleagues to see which Forex broker they are using, and find out whether they have any recommendations or complaints about a particular broker.

Forex Broker Fees

An important consideration when choosing a Forex broker is the fees which are charged. Forex brokers make money on their spread - the difference between the buying price and the selling price. You want to know the spread of a particular broker, and whether it is fixed or variable. An online Forex broker may offer lower spreads for certain types of accounts, or may change the spread on particular days of the week or on particular currency pairs.

Margin Policy

Another important consideration is the broker's margin policy. Margin can be calculated in various ways, and some brokers may have variable margin policies depending on the type of account or currency pairs.

Demo Account

Try to narrow your choice down to three Forex brokers which offer the services you require. Now open up a demo account with each of these brokers. The demo account will give you a real feel for the actual trading system of each online Forex broker. Try using the demo account in a variety of trading situations. You are looking for a responsive system that will perform well even in fast-moving markets.

The online Forex broker may charge extra for software features such as trailing stops or trading from the charts, so be sure you understand what the broker's software can do and whether there are any extra charges for the features you require.