When you will decide to start the trading on forex, the first task faced by you is to compare forex brokers to choose the right broker for your trade. In forex trading the success of the trader is directly attached with the comprehensiveness and the facilities provide by the broker. There are no fixed rules for the comparison of forex brokers but one thing that you must concentrate on is the proper research and the study of important indicators.
To compare forex brokers, here are some indicators that you should consider in taking the right decision. You can give different weights to every indicators and then assign different grades to each broker according to the facilities provided by the brokers.
Starting cost must be low:
Majority of people don’t want to take risk at the start of their trading. The start up cost of forex business must be low. This allows the traders an easy way to enter in the market. The tolerance level of trader decides the level of capital invested in the business because a person invests according to his tolerance limit of risk.
Broker’s commission:
Usually in forex market, the brokers charge you a commission for every trade not on the basis of information provided by you. The less the commission, the more your profit will be. In the comparison of forex brokers, commission can be an important decision variable.
Concentrate on spread offer by the broker:
Difference between the buying and selling price is called the spread for that trade. The lower spread will increase your chances of success because it allows trading more lots. The higher the spread, the fewer amounts you will earn. Normally the spread must be 2-5 pips.
Leverage offered:
The trader decides its leverage according to his nature. Leverage is the amount of return and the risk which you are ready to take. High risks will always result in high return. If a broker is offering high leverage that mean the gain on your investment is high but it involves a great risk. So to compare forex brokers consider the leverage on the basis of your risk bearing power.
Software support provided by broker:
Many brokers provide software support to their traders which help them to keep in touch with the market. The software should be such so that it can fulfill your trading requirements on the basis of your behavior just like terminals are provided by the stock brokers in the stock market scenario.
Currency pairs offered by the brokers:
In forex trading you can trade in many currencies. You are free to choose your home currency because you have more knowledge of it. The currencies which are more liquid and volatile are best for trade.
Trading lots allowed by brokers:
Again it will depend upon the nature of the trader. Some traders want to trade mini-lots, while others prefer to trade large. Depending upon your requirement you can select a broker who can best fits your trading requirement.
Customer support provided by broker:
Most of the traders who enter in the forex market need support and guidance’s for their first trade. Always give importance to those brokers who offer you 24*7 support.
Bottom line:
Without comparing first, you may trade without all the advantages you should have, so be sure to compare a few forex brokers before you decide on which one to select. You can use the parameters such as initial deposit, spread and leverage as your base in selecting the right broker for you.