Finding a Forex Broker

Of all the financial markets that you can trade, the Forex market probably has the most market participants. Banks, finance houses, governments, reserve banks, and individual traders all comprise the market – pumping through trillions of US Dollars each and every day.

To cater for the individual traders, Forex brokers offers a varying range of service, products, and trading platform, as well as a varying range of services and fees to each trader. If trading wasn't hard enough – finding the right broker is just another daunting task facing the novice trader.

So how do you do it? Should you go with the broker offering a 1 pip spread, or another with a 2 pip spread and a free charting software program?

Assessing Each Broker

The important thing to note when finding the right Forex broker is that each one is different. Many of them look like they are offering the same commissions and fees, software platforms and news services, however ultimately – no two brokers are the same.

When comparing brokers, it is prudent to judge them on the following things:

• Price, commission, spreads, overnight interest.
• Services offered, included software, trading platform.
• News, analysis, members only content.
• Reputation, reliability, slippage policy.

Each of these things will no doubt hold a different weighting for each client. For example, someone who does Forex trading as a part time profession (or on the side) will probably not be too worried about slippage (the difference between a quoted price and an executed price).

However, for someone who trades from home all day, and who needs exact entry prices to be executed at the same level that they are quoted – the slippage policy will be a huge focus.

Minimizing Your Trading Costs

Obviously, the goal of any successful trader is to make as much money from Forex as is humanely possible. To do this – part of the equation is to minimize costs.

Usually, brokers don't charge you for each trade you place, like a stock brokerage firm would. For example – you won't have to pay $9.95 for every buy and sell order which is filled.

Instead, brokers in the Forex industry charge a "spread" – which is the difference between the bid and ask prices at any one time. Therefore, if you are looking specifically to lower your trading costs, finding a Forex broker with the lowest "spreads" will definitely be your key objective.