By: Amit Achameesing
Submitted: 2010-12-18 20:19:49 | Word Count: 643
As a starting point you should look to carefully educate yourself before trading a real forex account. If you don't do your homework and open a real forex account it will not take long before you join the losers.Therefore in this article we shall examine some key features which usually the best forex brokers have.So you should know which factors are important when tracking down the best forex brokers.You can then ultimately select one of them to open a live account.
In making your list you will have to carefully examine some factors which are forex margin,forex leverage,ecn forex and the forex spread. For example you will have to look at the forex margin and leverage which forex brokers allow. Lets say that you want the margin-based leverage to be around 50:1 so that you can reasonably multiply your trading capital while not taking too much risks.Recently on 18th October 2010 the CFTC rule to limit leverage to 50:1 for major currency pairs has become official.The commission has argued that this will serve to better protect the interests of small traders.
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This rule has been vehemently opposed by the coalition of forex brokers and many of them now offer trading accounts in other jurisdictions as a way to circumvent the over-bearing regulations of the US. Also many forex brokers review sites now recommend to trade in the UK.If you believe that the reviews are right you will want to explore some forex brokers services available in other countries such as UK and Australia.However there are some other regulations which some argue is much more important.Is there enough protection of client funds if the forex brokers defraud?
The next step is to inquire whether the brokers are market makers or use ecn?. This will make a real difference as you will come to appreciate.Indeed this is crucial because a forex broker who operates a dealing desk can trade against your positions. This is why ecn brokers are preferred.But ecn brokers can at times be costly if they charge a commission on each trade.Will you then prefer to open a trading account with a broker who has a dealing desk?
The forex spread is the next factor to consider in building your list. Typically one will want to trade with a broker who has very low spreads.Usually ECN brokers offer the best competitive spreads because they have access to multiple liquidity providers.Moreover you have to find if the spreads offered by the brokers are fixed or variable?. Brokers who offer variable spreads have large fluctuations during the release of major economic news. A factor which is also associated with the price of currencies is slippage.This occurs when your order is executed at a different price from what you are expecting. During economic news releases slippage happens very often.
The above are key factors which you should look at when considering forex brokers. You will need to ask the following questions: What are the trading platforms offered by the forex brokers? How many different currency pairs can you trade? Do they offer micro, mini or standard accounts?We often recommend new retail traders to practice on a demo account and then open a micro account instead of going for a mini or standard account straightaway.
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To learn everything about forex brokers it is important that you find more information about the key factors that we have discussed.Visit the following link and read more about forex leverage.The other factors are also explained by forex expert Amit Achameesing.
