When you start your forex trading business, picking the right broker has a crucial effect on your future success. Some experts even claim that the broker can make a difference between a trader making a thousand dollars per day and a trader making only fifteen dollars per day. There are four main criteria for choosing a forex broker, all of them are highly important for your success and for determination of broker honesty.
Spreads are a major factor for choosing a broker. A spread is the difference between the buying price and selling price of the different treaties at a given point of time. During highly volatile market conditions spread tend to rise, but forex brokers should be tested for spreads on calm days. The spread for a pair of popular currencies, like the dollar and the Euro, should be something like 3 "forex units" called pips. When spreads for the major currencies rise beyond 5 pips on calm market conditions, the broker should be given a big "No".
The supported currencies are also a good indicator of a good broker. Most brokers will let you trade "the majors" – the treaties with the highest trading volumes, like the US dollar and the Euro. However, many forex traders like to be more speculative and trade pairs of more exotic currencies, like the Israeli shekel. Before you join a broker, make sure you can trade all the currency pairs you want.
Minimum deposit is an issue for many people when they open a forex trading account. Many brokers require large minimum deposits, sometimes as high as $ 10,000. However, other brokers sometimes require as little as $ 25 to open a trading account. Forex trading uses leverage which lets you earn large sums of money with little money invested, although it's not recommended to trade forex with little capital. If you are short on cash, make sure your broker will allow you to open an account even with what you have.
Beginners and experts, everyone has some technical difficulties when trading the forex market. To make sure you will be able to trade whenever you want, see if the broker supplies sufficient technical support. Without it, you can get stuck on a brutal moments and lose hundreds of dollars. A good technical support system is usually an indication of a good broker.