The 3 Things You Got To Know About Your Broker Before Your Trade
- Date: 2008-10-17 - Word Count: 762
Share This!
Before you can trade Forex, you will have to have a broker. There is a myriad selection to choose from. You have brokerage firms from all around the world, from the US from Europe, Asia even Africa!
The trick to a successful trading venture is to choose the right broker from the start. In order to choose that though, you will have to know a few things and learn what to look for. It will also be necessary to compare the different characteristics of each to see which one is most suitable to you. Like any good partnership, a relationship with your broker must be based on trust and good quality. Keep in mind the tips below when you make your selection.
Without a Forex broker you will not be able to make any trades. There are many different brokers, all of who claim to be the best for you and making a decision for one over another is not easy. There are some standard criteria that should be used for comparing and choosing.
First: The pips spread. This is a sensitive chord in the hearts of all traders and brokers. We traders feel that the lower the spread the better, while brokers seem to feel that a higher spread is better. Well the truth is that the spread is not as important as you think it is. What is truly important is that the spread is fixed and does not change! A change in the pip spread when you least expect it is disastrous for your trade. Imagine that you are in the midst of a trade and you placed your stop loss at 5 pips from your entry, suddenly there is a sharp movement in your charts and before you know it your loss has been hit. You blink your eyes a couple of times, and you see the price back where it was seconds ago. Has that ever happen to you before? It has hit me so many times when I first started that it stopped being funny. After I did a quick switch to a new broker all these strange sudden stop loss hits disappeared. A fix spread gives the trader room to plan a strategy that will increase the probability of a successful trade. You can nail down all the uncertainties and focus on the important things like making more money.
Second: Speed of order fills. Another area that you have to look out for as the last thing you want to do is that when you see a set up and decide to trade, the broker sits on your order. Your set up comes and it goes, and with that goes your chance at profits! Unless you are scalping a few seconds wait is acceptable, anything more than 20 seconds is totally out! You want your orders filled and if your broker can't do that it doesn't make any sense for you to actually pay them a commission at all does it?
Third: Reliability. A lot can be said about bad brokers with lousy reputations. In fact if you do a study on the different brokers you will realize that many professional traders do not use the charts that good brokerages provide. Most prefer to use other charting software and then place their orders with the broker. Of course we will still use their charts as an entry point indicator but frankly a broker is there to focus on filling trades not provide great charts. This leads us to our last point of reliability, you want to be with a brokerage that will pay you your profits you want to be able to access your account and fund it easily. If you choose to withdraw YOUR money then there shouldn't be a hassle at all. It is your money after all! Watch out for brokerages that demand you place a minimum amount in your account at all times before they allow you to withdraw. If you fall below that minimum the only way to get your money back is to go through a lengthy process of closing down your account before you see your cash.
Most online brokers provide good service and often it is when a new trader not understanding the terms and conditions which causes all these misunderstanding. Make it easy on your pocket, read all the fine print and should the brokers pull a fast on have no fear, go to the regulatory offices and seek redress. But if you had done your research before signing up you will not be in that spot in the first place!
The trick to a successful trading venture is to choose the right broker from the start. In order to choose that though, you will have to know a few things and learn what to look for. It will also be necessary to compare the different characteristics of each to see which one is most suitable to you. Like any good partnership, a relationship with your broker must be based on trust and good quality. Keep in mind the tips below when you make your selection.
Without a Forex broker you will not be able to make any trades. There are many different brokers, all of who claim to be the best for you and making a decision for one over another is not easy. There are some standard criteria that should be used for comparing and choosing.
First: The pips spread. This is a sensitive chord in the hearts of all traders and brokers. We traders feel that the lower the spread the better, while brokers seem to feel that a higher spread is better. Well the truth is that the spread is not as important as you think it is. What is truly important is that the spread is fixed and does not change! A change in the pip spread when you least expect it is disastrous for your trade. Imagine that you are in the midst of a trade and you placed your stop loss at 5 pips from your entry, suddenly there is a sharp movement in your charts and before you know it your loss has been hit. You blink your eyes a couple of times, and you see the price back where it was seconds ago. Has that ever happen to you before? It has hit me so many times when I first started that it stopped being funny. After I did a quick switch to a new broker all these strange sudden stop loss hits disappeared. A fix spread gives the trader room to plan a strategy that will increase the probability of a successful trade. You can nail down all the uncertainties and focus on the important things like making more money.
Second: Speed of order fills. Another area that you have to look out for as the last thing you want to do is that when you see a set up and decide to trade, the broker sits on your order. Your set up comes and it goes, and with that goes your chance at profits! Unless you are scalping a few seconds wait is acceptable, anything more than 20 seconds is totally out! You want your orders filled and if your broker can't do that it doesn't make any sense for you to actually pay them a commission at all does it?
Third: Reliability. A lot can be said about bad brokers with lousy reputations. In fact if you do a study on the different brokers you will realize that many professional traders do not use the charts that good brokerages provide. Most prefer to use other charting software and then place their orders with the broker. Of course we will still use their charts as an entry point indicator but frankly a broker is there to focus on filling trades not provide great charts. This leads us to our last point of reliability, you want to be with a brokerage that will pay you your profits you want to be able to access your account and fund it easily. If you choose to withdraw YOUR money then there shouldn't be a hassle at all. It is your money after all! Watch out for brokerages that demand you place a minimum amount in your account at all times before they allow you to withdraw. If you fall below that minimum the only way to get your money back is to go through a lengthy process of closing down your account before you see your cash.
Most online brokers provide good service and often it is when a new trader not understanding the terms and conditions which causes all these misunderstanding. Make it easy on your pocket, read all the fine print and should the brokers pull a fast on have no fear, go to the regulatory offices and seek redress. But if you had done your research before signing up you will not be in that spot in the first place!
Related Tags: retirement, currency trading, forex trading, investments, forex, money management, trading plan
Dr. Joshua Geralds is a successful investment specialist with over twenty years experience increasing the income of people world wide. For a limited time get his free Money Management to a Million Dollars e-course here: www.pipsalot.com Your Article Search Directory : Find in Articles
Recent articles in this category:
- Sbi Best Sip Plans 2010
SBI Mutual funds have introduced many mutual schemes. Each scheme has different limitations. SBI SIP - Icici Sip Plans 2010 - Best Sip Plans
ICICI Prudential offers many schemes. These fund schemes have SIP. What is SIP? SIP's expansion is S - Determining Where To Invest Money
There are several kinds of investments, also you will find numerous factors to find out where to inv - Retirement Plans A Necessity Of Life
A person works whole life to give a decent upbringing to his children and families. But while improv - Stock Market Timing Signals
Follow the PlanThis would seem a statement of common sense, but the fact of stock market timing sign - A Selection Of Financial And Investment Strategy Guidelines For Turning A Profit
Yet, we don't often have the money to leave work right at this moment. We need a constant salary to - Find Out The Profitable Way To Invest In Small Cap Stocks
Everyone wants to find a penny stocks list or other investment strategies that can turn your literal - Portfolio #4 - Watergate
IntroductionThe problem is not that the world is running out of water. No, the problem is that drink - Dulton Group: Information Content Of Dividends
Dulton Group helps you to analyze the information content of dividends, an important factor affectin - Coping With Fear In A Markets
The real fact is that all traders, investors as well as stock market investors, who feel afraid, occ
Most viewed articles in this category:
- Investor Stress: A New Approach
George Muzea is both an investor and a stock market advisor. In any given month, he will be paid $10 - Real Estate Investment Financing
1. Location: Your real estate investment's location is arguably the most important component of your - Canadian Oil Sands - Who Are the Major Players
The Canadian oil sands represent one of the most lucrative investment opportunities to oil and gas i - Why Bulk Preconstruction?
Bulk preconstruction is the latest trend in secure, high profit real estate investing. By buying wit - Investing - It Is Not As Scary As You Think
Many people want to have more money - OK everyone does. However, most people don't know how to go a - How Do I Know Which Programs Are Scams?
Although it is virtually impossible to tell if a HYIP is a scam until the moment when they stop payi - Currency Trading Success - 6 Tips to Increase your Profits
If you want to increase your profit potential and achieve currency trading success then the simple t - The Business Cycle
Investors who want to beat the market should be followers of the business cycle. The business cycle - Pros and Cons of Real Estate
Like any other profession, there are good and bad things about what are available. Each of the thin - The Fixer Upper
Real estate investing has become almost a national pastime. Millions are made every year on the buyi