Does Your Forex Broker Make The Grade? Must Ask Questions For Any Forex Trader
When it comes to forex brokers, there are more than a few to choose from; however, they are not all created equal. When it comes down to your money, you need to be certain that the broker you use is able to meet your expectations. You have every right to ask questions, and to compare Forex brokers in order to choose the right one. You can check our brokers review here: brokers review
Why does size matter to a Forex trader?
When it comes to choosing the right broker for a Forex trader, size definitely manners. Since the forex market is a type of over-the-counter market, offering no type of centralized exchange, not everyone will receive access to the same prices or the quality of trade execution. Institutions that have the biggest trade volume and the best financials will have access to the better execution and prices. When you find a bigger broker, they will be able to pass on these advantages of their size, better execution and prices, to you.
Who will execute the orders for a Forex Trader?
Not all of the forex brokers will quote rates the same way, some of the options include:
- A dealing desk: This means that the forex broker is creating the pricing and then executing the orders for the Forex trader.
- No dealing desk: this will mean that multiple banks are streaming competing prices through the forex broker, so that your orders will be executed by the actual banks.
What type of spread is used for the Forex Trader?
There are a number of options a Forex trader needs to consider when it comes to the spread:
- Fractional Pip Pricing: The majority of major currency pairs will be quoted to four decimal places, which means a pip will usually equal .0001, which is one basis point. Most brokers will round the price to the nearest pip, but others now offer fractional pip-pricing. This adds another decimal, which means spreads are typically accurate and tighter.
- Scalping the Market: There are some traders that prefer a short term scalping strategy, which will involve placement of the orders in the spread. In order for this method to be profitable, the market maker has to lose, which is why some brokers do not allow this. This is a risky strategy.
When you evaluate the methods that are used by various forex brokers, you will be able to find one that meets your investing goals. Taking the time to consider the things here will allow a new forex trader to find a quality broker who will look out for your best interests. You can try these two demo accounts for free. Plus500 and Instaforex are one of the best brokers around at this moment.