Foreign Currency Brokers

When selecting foreign currency brokers, there are certain factors that need to be considered. There are many to choose from, and your choice can make the difference between earning a profit and losing your investment. Trading foreign currency can be lucrative, but you need to be sure you can trust your broker. Here are some of the things you should consider when evaluating foreign currency brokers.

First of all, look for brokers who offer the widest selection of currencies. The larger brokers will deal in all of the major currencies. Those that offer only a couple of choices are usually small “dabblers” rather than serious brokers.

Narrow down your choice of brokers to those who can handle the amount you wish to invest. Some brokers have accounts for those who wish to invest small amounts, while others have a much higher minimum.

Foreign currency brokers do not work twenty-four hours a day, even though the market is open around the clock. Most brokers have set working hours. Look for one who works the hours you will be available to contact him if needed.

All foreign currency brokers will ask you to sign an agreement when you open an account. Read it carefully before you enroll. If there is something odd or worrisome to you, look for another broker.

Evaluate the websites of several foreign currency brokers. Spend some time browsing to see how quickly a site loads and how easy it is to navigate. Examine the tools offered to make sure that they load quickly and return accurate information. Some sites are prone to freezing even when they are not under heavy load. Check out the tools that they offer to see if they offer the calculators or trend analyses you desire.

All foreign currency brokers have different fee schedules, especially for margins and rollovers. Check what several sites are charging before you commit. Some of the larger sites actually have the best fees.

Foreign currency brokers can also have different policies for pips and ticks. A pip is the most minute price change. For example, the currency may be quoted to four decimal places. A movement up or down, in the fourth position after the decimal point would be a pip. Some foreign currency brokers have a minimum number of pips required for a trade. A tick is the smallest amount of time between two trades. A tick can be a millisecond or several hours. Normally, the most active currencies have the shortest ticks.

Most online foreign currency brokers have real time charts of current prices. Look for a chart that is being updated continuously rather than one that is updated periodically, such as every fifteen minutes. The currency market can change very quickly, so you need up to the minute information to make informed trades.

Some foreign currency brokers will give you a “dummy” account for practice. This not only tells you how you would have fared with your choices, but lets you become familiar with the site’s software. This is an especially nice tool for those who are new to currency trading.

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