Best Forex Broker
Choosing the best forex broker involves look at a few key criteria to assess their suitability for your needs. These include the forex broker’s policies on margin requirements, their liquidation policies, the software tools and news data they offer and the companies trading history and reputation.
One of the most important things to consider when trying to find the best forex broker is the amount of leverage that will be made available and what the conditions of the leverage will be. When you open a currency trading account you will need to supply a certain amount of your own funds as collateral in order to support the margin requirements which will be set by your forex broker. This initial deposit is known as your opening margin balance and it is the collateral for the trades that you will be making in the future. Unlike with a margin loan offered by your stockbroker the forex broker will not issue a margin call where more collateral is requested to keep the loan supported. Instead they will establish a ratio of margin balance to your open position which you must maintain at all times when you are trading.
It is very important that you understand the broker position on margin requirements and liquidation policies before you open an account. The requirements will also often differ depending on your account size. Some brokers are more small trader friendly than others and so you will want to take these factors into consideration when choosing your broker. The requirements can also differ depending on whether you are trading standard size lots or mini lot sizes. A standard lot size is 100,000 currency units and a mini lot size is 10,000 units.
Different brokers will also have different policies on how they liquidate the account if you fall below the margin requirements. Some forex brokers will liquidate the entire account if you fall below the margin requirements. Other forex brokers will only liquidate your biggest losing position or a part of your losing position until ratio is met again. It is very important that you know how your broker will react before the trade becomes liquidated. Unfortunately when your trade is going against you it can be a terrible time to have your entire account liquidated forcibly as it gives you no opportunity to trade out again.
There are also some basic background checks that you should perform on your forex broker before opening your account. Make sure that there are registered with the financial regulatory body in the country that they operate. Have a look at how long they have been in business and do an internet search on the company to see what other customers have to say about them as well as any financial news that pertains to that broker.
You will also want to have a look at what other trading tools the broker supplies when you open the account. Some Forex brokers will offer an extensive array of software to help you trade as well as technical analysis tools. Also you should find out what kind of access to market information they can provide. Having fast, accurate information is key to being a successful currency trader. Find out whether this information is free as a client or whether there are additional fees.