Candlestick Trading Blog

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When conducting online forex currency trading there is a lot of information that investors must know. One of the most important pieces of information for new forex investor is to research and to decide on a forex broker. In today's article we will discuss various characteristics and things that every investor must find out about a brokerage firm before selecting one.

Trading Platform
Forex brokers offer many different types of forex trading platforms to investors that have great tools and resources. Before you commit to broker, you should request a free trial first to ensure their platform is what you are looking for. You should also check out specific features such as the technical analysis tools offered, the news and the data, the charts, and of course their level of support for their trading system.

Spread
When online forex currency trading it is important that every investor finds out how to calculate the spread. The spread is the difference between the price a currency can be purchased at, and the price that is can be sold. The spread is calculated in pips, and the reason it is important is because forex brokers make their money on the spread, instead of on commissions, like stock brokers. You should be looking for a broker that has a low spread.

Qualifications
Ensure that your broker, or the firms of interest, are registered with the Futures Commission Merchant (FCM) and that they are regulated by the Commodity Futures Trading Commission (CFTC). This is of course for your protection so that you know you are dealing with a reliable and qualified firm. The majority of forex brokers are attached to lending institutions or large banks due to the large amounts of leverage that they need to provide to their clients. The brokerage firm's qualifications should be listed on its website.

Lots of Leverage
Leverage is the ratio between total capital available to the investor and the actual capital. This leverage is the amount of money your broker will lend to you when you trade forex. When online forex currency trading, leverage is important because the source of profit are fractions of a cent. Please note that the lower the leverage, the lower the profit, but the margin call risk is also lower. Conversely, the higher the leverage, the higher the profit, but the margin call risk is higher.

The last important thing to consider when choosing a forex broker is the type of account that you choose to set up. There are mini accounts with a lower minimum trading amount, and there are standard accounts that have a higher minimum amount. The amount of leverage you receive, when forex trading with your account, will change depending on the type of account that you choose to set up, so be sure to research that piece at as well.

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