Forex Trade – Intelligent Forex

How Do You Find a Good Forex Broker?

Posted in Forex Brokers by intelligentforex on January 5, 2010
Tags: , ,

Trading Forex profitably is not easy and one major factor in this is the quality of the Forex broker that a trader uses.

Unfortunately, the FX marketplace in not regulated and Forex brokers actually act as market makers. That means that brokerages are actually pretty much free to act as they like. This results in some firms manipulating the trading market against their customers, to their own favor.

It is vital to be able to recognize these companies and avoid them at all costs. The two major areas in which a brokerage can affect a trader, is with slippage and the currency spread.

Slippage is when a trader tries to enter or exit a trade at a specific price. A broker may adjust the price that the trader can actually get, leaving them in a less advantageous position.

The spread is the difference between the bid and the ask price, or basically what a currency can be bought or sold for, at any given time.

Brokers can set this price. Traders need to look for a firm that offers competitive spreads and also more important one that does not vary them wildly, especially during periods of high volatility in the markets.

This can have the effect of stopping out, or triggering buy orders for certain positions artificially, as a broker increases their spreads to cover their positions and protect their own assets.

Finding a broker that will act fairly and ethically is absolutely vital for ordinary traders to have the opportunity to trade successfully and profitably.


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