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How to choose a forex broker

how_to_choose_a_forex_brokerWith the availability of hundreds and even thousands of forex brokers, every new forex trader is undoubtedly confused about what to look for and which forex broker is the best choice. Below we give you 7 tips to use when selecting a forex broker.

  1. Regulation: Regulated brokers are well respected in the forex community. They are fair with their clients and generally clients can feel that their money is safe. Losing the license the forex broker worked so hard to get, is something they will try very hard to avoid by at leasat providing a pleasant customer experience. The US NFA and CFTC, British FSA, Swiss FINMA, the Cyprus SEC and the Australian ASIC are all good stamps of approval for aMore than one license that a broker has even better, this would mean they are dedicated to serving their clients and are showing that they are financially sound companies. One thing to keep in mind, donít just trust a brokerís site, Check out the official government sites of each regulatory body
  2. Forex Cash Back offers

  3. Profitability rate:  Speaking of regulation, this is a rather new metric that is only available to US brokers. Brokers are now required to post the profitability rate of their customers. A broker with a higher profitability rate likely works harder to make their traders succeed. This can be done in terms of education, support or simply lower spreads and better execution.
  4. Transparency: With the significant growth of forex social networks, transparency isnít only a nice buzzword. A broker that is available on several social trading platforms such as ZuluTrade and Currensee shows that this broker is customer centric. Rarely scam operation will be allowed to participate on Zulutrade or Currensee.
  5. Bad Online Reviews: Positive reviews can be tricky thing to gauge. A broker can manufacture positive review very easily. But look up for genuine negative ones Ė Google the brokerís name with words such as ďscamĒ or ďproblemĒ to see if clients had troubles with the broker, especially in the sensitive field of withdrawing money. Also check ForexPeaceArmy(ForexPeaceArmy.com) this website has become the default place to complain and sometimes find resolution to client complaints. If a broker is getting constantly bad reviews perhaps it is best to stay away.
  6. Broker type: Most brokers are market makers, meaning they create the market for their traders. In other words they take the opposite side of the trade. This may easily lead to a conflict of interest between the broker and the trader, as the broker is also a participant in this market, and may bet against the trader. NDD / ECN / STP brokers generally send the orders to bigger institutions and just serve as mediator taking commissions. As most brokers are market makers, and many of them are OK, this factor is hard to apply. Also donít take a brokerís word that they are NDD or STP, many brokers use these terms just to lure traders and still take the opposite side of the trade.
  7. Spreads: Look at the forex brokerís advertised spreads. Generally speaking the EUR/USD spread should be somewhere between 1 and 2 pips, a pip is the 4th digit after the decimal point, for example a broker could offer the following quote EUR/USD buy 1.2852, EUR/USD sell 1.28535. If you subtract 1.2852 from 1.28535 you will get 0.00015 which is 1.5 pips. A broker offering a spread of 1.5 pips is offering a good deal. Think of it this way, if you go to buy a flat screen TV and you know that they go for about $500 letís say for a 45 inch one, you wouldnít pay $700 for that TV right? Same goes for the spread, if you know you can get 1.5 pips somewhere why would you pay a 3 pip spread elsewhere.
  8. Availabilty of a rebate through FxRebateGurus:

This tip is a bit different, we are talking about lowering your commission by doing something outside of the box. As a forex rebate provider FxRebateGurus works with over 30 forex brokers. We work closely with each and every one of our brokers and we aim to make tradersí experiences hassle free and lower their transaction costs. We urge traders to select the best broker for their needs while keeping in mind the rebate rate we offer. To see the brokers we offer and the rebate rates for each click here

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