Tips on Choosing the Right Forex Broker
To trade forex you need to open an account with a forex broker. The global nature of forex markets means that you have a wide choice of forex brokers to choose fro Is broker legit right across the world.
The forex trading business runs differently to equity broking, where trades are made through a clearing house and stock exchange and where money is made from fees for every trade, often referred to as the “brokerage”.
Forex brokers make their money from the difference between their quotes of the ask price, the price their customer buys at, and the bid price, the price their customer sell at. This is called the spread and is measured in “points” or “PIPs”, the smallest measurement for a change in the price of a forex. For example, a one “point” or “PIP” change in the USD is 0.0001X the USD amount. Naturally, a wider spread results in more revenue for the broking firm.
Forex Brokers Reputation & Capital Backing
To choose the right forex broker, you should start with considering its reputation and what trading services it offers. Doing your research thoroughly will take time, but as with trading itself, will save and make you money in the future. There is a wealth of information on-line and in magazines. It is important to be sure of the credibility of your information sources. Internet forums used by other forex traders can be very helpful in cutting through the claims of each company. By listening to people, forums and magazines that you trust, you can build a list of quality firms to choose form.
It is important to be aware of unscrupulous firms as well as those operating in countries where regulations are weak. The USA, UK, Hong Kong & Australia are example of countries with very strong regulatory environments.