Forex Brokers
By Simon Harris, Thu Dec 8th

Most traders use a broker to handle their transactions.What exactly is a broker? Strictly speaking, a broker is anindividual or a company that buys and sells orders according theinvestor's decisions. Brokers earn money by charging acommission or a fee for their services.

A broker needs to be associated with a large financialinstitution such as a bank in order to provide the fundsnecessary for margin trading. In the United States a brokershould be registered as a Futures Commission Merchant (FCM) withthe Commodity Futures Trading Commission (CFTC) as protectionagainst fraud and abusive trade practices.

Before trading you need to set up an account with a FOREXbroker. You may feel overwhelmed by the number of brokers whooffer their services online. Deciding on a broker requires alittle bit of research on your part, but the time spent willgive you insight into the services that are available and feescharged by various brokers.

The best advertising is word-of-mouth advertising, and this isjust as valid in trading as it is for any other type ofbusiness. Talk to friends and associates to see who they aredealing with and find if they have any complaints ordifficulties in dealing with a particular broker.

You could try selecting a few online brokers and contact theirInternet help desks to see how quickly they respond to enquiriesand whether or not they answer questions to your satisfaction.Keep in mind, however, that pre-sales service may be better thanafter sales service. This can be true for any online business,not just brokers.

Customer satisfaction and safety are just part of the story. Youwant to find a broker who executes orders quickly and withminimum slippage. All online brokers should offer



automaticexecution and have clear policies regarding slippage. Theyshould be able to tell you how much slippage can be expected inboth normal and fast-moving markets.

Next you want to know the fees involved. What is the spread? Isspread fixed or variable according to the type of account? Aremini accounts subject to wider spreads? Are there any othercharges? Smaller spreads mean more profit for the trader, butthere may be a trade-off between spread and service. Look at theoverall picture before deciding to go with a particular broker.

Margin accounts are the lifeblood of trading, so be sureyou understand the broker's margin terms before setting up anaccount. You need to know the margin requirements and how marginis calculated. Does margin change according to the currencytraded? Is it the same every day of the week? Some brokers mayoffer different margins for mini and standard accounts.

Trading software is very important for the online trader.Get a feel for the options that are available by trying out ademo account at a few online brokers. Above all, you are lookingfor reliability and the ability to perform well in fast-movingmarkets. The software should offer automatic trading and mayhave special features such as trailing stops and trading fromthe chart. Some features may only be available at an extra cost,so be sure you understand what your trading needs are and howmuch the broker charges to provide them.

Other information to find out about includes the broker's policyregarding minimum account balances, interest payments on accountbalances, which currencies can be traded and whether or notnon-standard sized lots can be traded. You should also find outwhether clients' funds are insured and the extent of thatinsurance.

About the author:This article provided courtesy of http://www.about-forex.net