Choose the Right Forex Dealer (Part I)
Almost 90% of the traders in currency markets are speculators. Most of the investors start forex day trading as a speculating venture to make capital gains. Once you have made the positive decision to start currency trading, you need to choose the right forex broker. The right choice will greatly influence the success of the whole enterprise.
Forex trading is hot right now. It is being called the Recession Proof Business of 21st Century. The market is overcrowded with companies and banks offering online forex brokerage services. Internet has opened the forex markets to individual retail traders and small investors. It will not be easy for you to make the right choice of a forex broker. You need a certain set of criteria. These criteria will mostly depend on your preferences, interests and means as an individual trader and will depend on your trading tactics and strategies.
What is the best method to choose the right forex broker? Compose a list of questions to ask the forex broker before making a final decision. The following are some of the suggested questions. You should ask the forex broker these questions before making a final decision.
What is the amount of the interday and overnight margin and corresponding leverage? Many good online forex brokers offer margin between 2-5%. They provide leverage ranging from 20:1 to 50:1. Higher margin requirement means lower investment efficiency.
However, beware of lower margin. It 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. You will face many trading problems with such a broker. It will become difficult for you to work under such conditions.
What is the minimum contract size? Now days, the standard contract size is $100,000. This contract size is quite affordable and allows for reasonably effective money management with limited capital. This contract size also allows small individual investors to participate in currency speculation.
What are the minimum deposit requirements demanded by the forex broker? It is not unusual that many new traders dont have sufficient funds to open an account. The investment and financial means of traders differ. $10,000 is the required minimum amount corresponding to the forex market conditions by good dealers. 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 by the forex broker? The ideal condition should be the execution of the stop and limit orders at the fixed price. This should be 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 under unsteady market conditions mostly defined by the broker themselves.
The amount of slippage depends on the current state of the currency market. It can vary from a few pips to tens of pips. It is practically impossible to arbitrate the prices received from the broker during a currency transaction. The slippage creates favorable conditions for the abuse of an individual trader by the forex broker. - 23217
Forex trading is hot right now. It is being called the Recession Proof Business of 21st Century. The market is overcrowded with companies and banks offering online forex brokerage services. Internet has opened the forex markets to individual retail traders and small investors. It will not be easy for you to make the right choice of a forex broker. You need a certain set of criteria. These criteria will mostly depend on your preferences, interests and means as an individual trader and will depend on your trading tactics and strategies.
What is the best method to choose the right forex broker? Compose a list of questions to ask the forex broker before making a final decision. The following are some of the suggested questions. You should ask the forex broker these questions before making a final decision.
What is the amount of the interday and overnight margin and corresponding leverage? Many good online forex brokers offer margin between 2-5%. They provide leverage ranging from 20:1 to 50:1. Higher margin requirement means lower investment efficiency.
However, beware of lower margin. It 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. You will face many trading problems with such a broker. It will become difficult for you to work under such conditions.
What is the minimum contract size? Now days, the standard contract size is $100,000. This contract size is quite affordable and allows for reasonably effective money management with limited capital. This contract size also allows small individual investors to participate in currency speculation.
What are the minimum deposit requirements demanded by the forex broker? It is not unusual that many new traders dont have sufficient funds to open an account. The investment and financial means of traders differ. $10,000 is the required minimum amount corresponding to the forex market conditions by good dealers. 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 by the forex broker? The ideal condition should be the execution of the stop and limit orders at the fixed price. This should be 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 under unsteady market conditions mostly defined by the broker themselves.
The amount of slippage depends on the current state of the currency market. It can vary from a few pips to tens of pips. It is practically impossible to arbitrate the prices received from the broker during a currency transaction. The slippage creates favorable conditions for the abuse of an individual trader by the forex broker. - 23217
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 @ 12:48 AM
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