Choose the Right Forex Dealer (Part I)
Almost 90% of the investors in currency markets are short term speculators. Most of the investors want quick capital gains by starting forex day trading as a speculating venture. If you have made the positive decision to start currency trading, your first step should be choosing the right forex broker. The right choice of a broker will greatly influence the success of your whole enterprise.
Now days, the market is overcrowded with companies and banks offering online forex brokerage services to individual retail traders and small investors to access the currency markets. It will not be easy for you to make the right choice without a certain set of criteria. These criteria will mostly depend on your interests, preferences and means as an individual trader depending on your trading strategies and tactics.
The best method to choose the right forex broker is to compose a list of questions to ask the forex broker before making a final decision. The following are some of the suggested questions that you should ask the forex broker before making a final decision.
What is the amount of the interday and overnight margin? What is the corresponding leverage? Many online forex brokers offer margin between 2-5%. They provide leverage ranging from 20:1 to 100:1. Higher margin requirement means lower investment efficiency for you. Margin is the amount the broker sets aside as guarantee against your trading losses.
However, lower margin means that most of the time the forex broker will be against you as a trader and will do everything possible to prevent you from winning. It will become difficult for you to work under such conditions. You will face many trading problems with such a broker.
What is the minimum contract size offered? Now days, the standard contract size is a $100,000 lot. This contract size is quite affordable. This contract size also allows small individual investors to participate in currency speculation. It allows for reasonably effective money management with limited capital.
What are the requirements of minimum deposit demanded by the broker? It is common that many new traders dont have sufficient funds to open an account. The investment and financial means of trader differ. I think $10,000 is the required minimum amount corresponding to the forex market conditions. In my opinion, the optimal minimum amount is $10,000 with 2% margin requirement.
What are the terms of setting and executing stop and limit orders? The ideal condition should be the execution of the stop and limit orders at the fixed price regardless of the market conditions, its speed and its direction. Some forex brokers provide this type of execution. Other brokers reserve the right to fulfill an order with slippage.
The value of slippage depends on the current state of the market and can fluctuate from a few pips to tens of pips. The slippage creates favorable conditions for the abuse of the trader by the broker. Although it is practically impossible to arbitrate the price received from the broker during the transaction. - 23167
Now days, the market is overcrowded with companies and banks offering online forex brokerage services to individual retail traders and small investors to access the currency markets. It will not be easy for you to make the right choice without a certain set of criteria. These criteria will mostly depend on your interests, preferences and means as an individual trader depending on your trading strategies and tactics.
The best method to choose the right forex broker is to compose a list of questions to ask the forex broker before making a final decision. The following are some of the suggested questions that you should ask the forex broker before making a final decision.
What is the amount of the interday and overnight margin? What is the corresponding leverage? Many online forex brokers offer margin between 2-5%. They provide leverage ranging from 20:1 to 100:1. Higher margin requirement means lower investment efficiency for you. Margin is the amount the broker sets aside as guarantee against your trading losses.
However, lower margin means that most of the time the forex broker will be against you as a trader and will do everything possible to prevent you from winning. It will become difficult for you to work under such conditions. You will face many trading problems with such a broker.
What is the minimum contract size offered? Now days, the standard contract size is a $100,000 lot. This contract size is quite affordable. This contract size also allows small individual investors to participate in currency speculation. It allows for reasonably effective money management with limited capital.
What are the requirements of minimum deposit demanded by the broker? It is common that many new traders dont have sufficient funds to open an account. The investment and financial means of trader differ. I think $10,000 is the required minimum amount corresponding to the forex market conditions. In my opinion, the optimal minimum amount is $10,000 with 2% margin requirement.
What are the terms of setting and executing stop and limit orders? The ideal condition should be the execution of the stop and limit orders at the fixed price regardless of the market conditions, its speed and its direction. Some forex brokers provide this type of execution. Other brokers reserve the right to fulfill an order with slippage.
The value of slippage depends on the current state of the market and can fluctuate from a few pips to tens of pips. The slippage creates favorable conditions for the abuse of the trader by the broker. Although it is practically impossible to arbitrate the price received from the broker during the transaction. - 23167
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Develop your own Forex Trading System.
posted by X - Men @ 1:38 AM
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