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The first requirement you must satisfy if you want to get into investing is having sufficient capital that will be reserved for it. “Enough” here means income in excess of what you need for your everyday expenditures. You can start setting your personal investment goals once you have the required amount. People commonly begin investing for reasons such as college tuition of kids, retirement, or the purchase of a house. In addition, listed hereunder are seven of the usual investing mistakes that must be avoided. You want to make sure you do not do these things when you are getting involved in money investing.

1.) Failure to implement the diversification method.

The diversification method involves combining different investment vehicles such as bonds, stocks, mutual funds and cash within a portfolio. This is a method that the successful investors use to manage risks. If you fail to implement this method, the impact that fluctuations from even a single security will have on your portfolio can be quite weighty.

2.) Selling of stocks impulsively.

Patience is a trait all investors must have. You must anticipate that the growth of majority of investments is very slow. A lot of investors get thwarted easily and begin to sell quickly. Although day trading is profitable for some, it is not advisable for most individuals. You should avoid fancy short term trading and stick to the basics.

3.) Chasing investments.

Being among yesterday’s hottest stocks is not enough grounds to pursue a certain investment. Everything is unstable when it comes to investing. A certain stock may just dramatically experience a collapse today when it was the most sought-after yesterday. What you should do is do a research on the different investment assets and identify those that look promising based on performances in the past and on the indicators of future results. You can be more methodical in your approach by using forex tips to make some money.

4.) Not performing an allocation for assets prior to buying.

The first step to becoming a successful investor is deciding how much to invest in every asset. You will only create more problems if you buy a stock, fund, or any other investment when you have not yet done a provision for your investment vehicles.

5.) Not doing a risk assessment.

As an investor, you how to determine the amount of money you can afford to lose without crying too much. Many investors are not prepared for investments with high risks yet these are what they frequently invest in.

6.) Tendency to get distracted easily.

You should develop an investing strategy and strictly abide by it in any case. Unless you have not been making any success with it for some time now, then there is no reason to simply deviate from it. Do not let yourself be distracted by a sudden trend or a hot tip.

7.) Not keeping track of investments.

Many investors, particularly beginners, keep a close watch on their assets only to get thwarted or become uninterested after a while. It is essential for an investor to monitor his investments on a regular basis.

You can be a millionaire with forex trading but you need to invest a great deal of your time and commit yourself to learning all the essentials to become one. There are some who suppose that anyone could simply begin forex trading and make big money from it. Eventually, they end up failing because they did not even care to study the fundamentals prior to trading. Hence, forex trading requires you to be knowledgeable about the nitty-gritty of foreign exchange which you will also find useful throughout your entire trading career.

What you have to understand primarily is that there are a lot of things about this industry that you are required to learn. As a matter of fact, you have to study and understand jargon used exclusively for forex in order to proceed.

It would be very helpful to read books on forex but make sure to read those that have beginners in mind and are written in the recent past. You could find that basics discussed in older forex books are indeed similar to the more recent books but the scenarios given as examples may no longer be pertinent to the conditions of the market today. Reading how to trade forex literature can be very useful. You could also search online for useful resources. Once you have become cognizant of the fundamentals of foreign exchange, then you can proceed to the trading aspect.

Since the foreign exchange market is even bigger than the US stock market, you should expect to find a lot of investment options to choose from. Hence, step 1 is doing your homework and determining the most effective ways to invest. You can consult best forex trading publications for help in this area.

Step 2, since you will be trading through a margin broker, you need to select one who is trustworthy, has a lot of experience, and is knowledgeable about the forex market. Make sure you are comfortable with them and can discuss currency trading openly with them.

The third step is to familiarize yourself with the different countries’ currencies and their fluctuations. As a forex trader, you will be trading currencies in pairs. For beginners, learning to trade just one pair and abiding by it is advisable until you become erudite about its qualities. In forex trading, it is vital that you have the ability to see the current price as it occurs. The fourth step, therefore, is to get yourself a charting package and complete your technical analysis.

The fifth step is to develop your own method of knowing the appropriate times for entering and exiting trades are.

Step 6; use a dummy account for trading first. When you have already accomplished a number of successful trades and are sure of yourself, you can start using real money for trading. Either a mini or a micro account is advisable for this.

And finally, as with any other business, you should be able to manage your money effectively to save you from being bereaved of your funds. Thus, Step 7 is to know how much money to use on a certain trade.

If you are familiar with the guidelines and strategies for successful forex trading, then you have the potential to become rich from it. Much as you can get rich from it though, you can easily be robbed off your money from forex trading particularly by scammers out there who are always on the lookout for their next victim. Forex markets can be tricky if you are not careful.

A big amount of capital is normally entailed in forex trading. It also involves the help of intermediaries such as brokers to handle compromises and other transactions.This is where the scam can enter. There are some hustlers out there who pose as brokers and deceive you of your hard-earned cash. They can try to trick you with several maneuvers. Thus, you must take additional preventive measures to guarantee that your undertaking as a forex trader will do you good, rather than prove to be distressing.

The key to avoiding being scammed by forex brokers is by knowing who your brokers really are. This is especially important if you are employing forex online brokers to make your money. Are they reputable, where are they based, what laws govern them, what comprise their forex experience, who referred them to you, etc. All these information are vital and should not be taken lightly. It would be ideal to get a broker who is just near you and you can access even in person if the need arises. Furthermore, if a broker happens to be a forex trader at the same time, do not hire him. His priority would be himself over you. You would only find yourself competing with someone you cannot win against.

Researching for the credentials and reputation of your broker would be advisable. Normally, they have their own sites that displays information about their abilities, achievements, and existing clients. In addition, asking your fellow traders for recommended names with to whom they have already worked with would be useful. Doing so guarantees working with somebody who has a satisfactorily performed with other traders. Make sure also that your broker of choice is one that is registered and bound by the rules of a market regulator. You can get his status and a report on him from the regulator.

You are predisposed to a lot of harmful things that most forex scammers can do unless you are extremely au fait with the particulars of forex trading. Therefore, the foremost consideration when you intend to be successful in forex trading is to educate yourself and not allowing anybody to fool you. The best thing would be to learn all you can about forex trading course. Doing this gives you the ability to immediately tell if something fishy is going on, thus preventing scammers from taking advantage of you. The actions of your brokers will be something you can easily understand. Deceiving you will then prove to be easier said than done for any scammer.

The main focus of investing is on buying and selling of mutual funds, bonds, or stocks or forex trading. There are, nonetheless, other significant choices involved in investing besides these that you will be making. As a matter of fact, there is an example that does not even require for an investor to be acquainted with the stock market.

This significant choice is choosing a broker. You want to see if the broker has experience with currency trading strategies. If you decide to invest your money with learn to trade forex then you want to make sure you have an experienced broker. Try asking if they use things like forex converters to test their knowledge. A lot of brokerage services are available on the internet, many of which are just as good as or even better than conventional brick-and-mortar services. The following are the five pointers to consider when selecting a broker via the internet:

Check the availability of the brokerage company’s website. Launch your browser and go the website of the company. Take notice of the time it takes for the site to load. Reload the site continuously throughout the day at different intervals, particularly for peak hours and find out if the site can still be accessed without difficulty. Also, examine each page to check for broken links. You simply cannot afford delays in investing.

Identify the available trading options, if any. Immediate interaction and information exchange whenever there is a need for it is made possible through the internet, making it very convenient for investors.However, we cannot always bring our computers with us. Thus, you should go for a broker from a company that provides other alternatives for placing trades.

Consider the broker’s background. As an investor, it is your duty to study about a stock before buying it. In the same way, you must first do a research on the brokerage company to gather all the responses that you can find. If you can acquire both testimonials and criticisms, much better. From what you can gather from these comments, you will be able to tell if this broker is a good one.

Going for discounts may not always be a helpful thing to do. Many people tend to take advantage of discounts, thinking that they are getting a good deal. What could be true for several circumstances may not always hold true when it comes to investing. It is advisable to go for a full-service broker.

Find out the actual level of service their customer support provides. Having to wait is one of life’s most vexing experiences. Likewise, it can be really exasperating to hang around for twenty minutes waiting for customer support to address you.

Hence, dial the company’s service desk hotline and pretend to ask a question to see how long it would take before you get an answer. You can forget about hiring the broker if you are not satisfied. Remember that as customer service representatives, their main obligation is to help customers. If a customer does not find their service efficient, what is his guarantee that their broker is any better?

What’s Forex? Forex is the acronym of Foreign Exchange. In forex for example You can buy or sell currencies as US dollars, euro, etc. Forex has no physical locations but is an online financial market. Daily turnover is more than 3 bilion USD. To operate in forex marker You need a broker or a bank. You can start making forex trading with only 10 usd and You can use leverage to increase You deposit. For example, with 1:500 leverage if Yoiu have $ 1.000 they will became 500,000 usd. FOrex was born in 1973 thanks to Bretton Woods agreement. Forex is a big market where only currencies are axchanged. Here some terms related to forex market:

 

base currency: is the first currency of a pair. In JPY/USD base is JPY

basis: the difference beetwen spot price and future price

bid: the difference beetwen bidding price and asking price. Also know as spread.

cable: is the cross GPB/USD

cross rates: the exchange ratio beetwen two currencies

currency: is the exchange rate of a country

leverage: When trading forex You can use leverage. Using 1:200 leverage menas that having only $ 1,000 it will became $ 1,000×200 =  $ 200,000

 Day Trader – Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.

Dealer – An individual or firm that acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Deficit – A negative balance of trade or payments.

Delivery – An FX trade where both sides make and take actual delivery of the currencies traded.

Department of Communities and Local Government (DCLG) UK House Prices – A monthly survey produced by the DCLG that uses a very large sample of all completed house sales to measure the price trends in the UK real estate market.

Depreciation – A fall in the value of a currency due to market forces.

 

Factory Orders – The dollar level of new orders for both durable and nondurable goods. This report is more in depth than the durable goods report which is released earlier in the month.

Federal Reserve (Fed) – The Central Bank for the United States.

First In First Out (FIFO) – Open positions are closed according to the FIFO accounting rule. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.

Flat/square – Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.

Foreign Exchange – (Forex, FX) – the simultaneous buying of one currency and selling of another.

Forward – The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

Forward Points – The pips added to or subtracted from the current exchange rate to calculate a forward price.

French Central Government Balance – The difference between the central government’s monthly income and spending.

Fundamental Analysis – Analysis of economic and political information with the objective of determining future movements in a financial market.

Futures Contract – An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts – ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

FX – Foreign Exchange.

 

 

Industrial Production – Measures the total value of output produced by manufacturers, mines and utilities. This data tends to react quickly to the expansions and contractions of the business cycle and can act as a leading indicator of employment and personal income.

Inflation – An economic condition whereby prices for consumer goods rise, eroding purchasing power.

Initial Margin – The initial deposit of collateral required to enter into a position as a guarantee on future performance.

Interbank Rates – The Foreign Exchange rates at which large international banks quote other large international banks.

Intervention – Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.

Introducing Broker – A person or corporate entity which introduces accounts to FOREX.com for a fee.

ISM Manufacturing Index – An index that assesses the state of US manufacturing sector by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

ISM Non-Manufacturing – An index that survey service sector firms for their outlook, representing the other 80% of the U.S. economy not covered by ISM MANUFACTURING REPORT. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

 

 

Japanese Economy Watchers Survey – Measures the mood of businesses that directly service consumers such waiters, drivers, and beauticians. Readings above 50 generally signal improvements in sentiment.

Japanese Machine Tool Orders – Measures the total value of new orders placed with machine tool manufactures. Machine tool orders are a measure of the demand for machines that make machines, a leading indicator of future industrial production. Strong data generally signals that manufacturing is improving and that the economy is in an expansion phase

 

 

Kiwi – Slang for the New Zealand dollar.

 

 

Leading Indicators – Statistics that are considered to predict future economic activity.

Leverage – Also called margin. The ratio of the amount used in a transaction to the required security deposit.

LIBOR – The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from another bank.

Limit order – An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50)

Liquidation – The closing of an existing position through the execution of an offsetting transaction.

Liquidity – The ability of a market to accept large transaction with minimal to no impact on price stability.

Long position – A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.

Lot – A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

 

 

Manufacturing Production – Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measure the 13 sub sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production.

Margin – The required equity that an investor must deposit to collateralize a position.

Margin Call – A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.

Market Maker – A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.

Market Risk – Exposure to changes in market prices.

Mark-to-Market – Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

Maturity – The date for settlement or expiry of a financial instrument.

 

 

Personal Income – Measures an individuals’ total annual gross earnings from wages, business enterprises and various investments. Personal income is the key to personal spending, which accounts for 2/3 of GDP in the major economies.

Pips – The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.

Political Risk – Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.

Position – The netted total holdings of a given currency.

Premium – In the currency markets, describes the amount by which the forward or futures price exceed the spot price.

Price Transparency – Describes quotes to which every market participant has equal access.

Profit /Loss or “P/L” or Gain/Loss – The actual “realized” gain or loss resulting fromtrading activities on Closed Positions, plus the theoretical “unrealized” gain or loss on Open Positions that have been Mark-to-Market.

Purchasing Managers Index Services (France, Germany, Eurozone, UK) – Measures an outlook of purchasing managers in the service sector. Such managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Readings above 50 generally indicate expansion, while reading below 50 suggest economic contraction.

 

 

Quote – An indicative market price, normally used for information purposes only.

 

 

Rally – A recovery in price after a period of decline.

Range – The difference between the highest and lowest price of a future recorded during a given trading session.

Rate – The price of one currency in terms of another, typically used for dealing purposes.

Resistance – A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.

Retail Sales – Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of variety of different types and sizes. This data gives a look into consumer spending behavior, which is a key determinant of growth in all major economies.

Revaluation – An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.

Risk – Exposure to uncertain change, most often used with a negative connotation of adverse change.

Risk Management – the employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.

Roll-Over – A rollover is the simultaneous closing of an open position for today’s value date and the opening of the same position for the next day’s value date at a price reflecting the interest rate differential between the two currencies.

The spot forex market is traded on a two-day value date. For example, for trades executed on Monday, the value date is Wednesday. However, if a position is opened on Monday and held overnight (remains open after 1700 ET), the value date is now Thursday. The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday; because banks are closed on Saturday the value date is actually the following Monday. Due to the weekend, positions held overnight on Wednesday incur or earn an extra two days of interest. Trades with a value date that falls on a holiday will also incur or earn additional interest.

Round trip – Buying and selling of a specified amount of currency.

 

 

Settlement – The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.

Short Position – An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.

Simple Moving Average (SMA) – A simple average of a pre – defined amount of price bars. For example, a 50 period Daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied here.

Spot Market – A physical market in which foreign currencies and commodities are bought and sold for cash at the current market price, settled “on the spot” and delivered immediately.

Spot Price – The current market price. Settlement of spot transactions usually occurs within two business days.

Spot Trade – The purchase or sale of a foreign currency or commodity for immediate delivery (as opposed to a date in the future). Spot contracts are settled electronically.

Spread – The difference between the bid and offer prices.

Square – Purchase and sales are in balance and thus the dealer has no open position.

Sterling – slang for British Pound.

Stop Loss Order – Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.

Support Levels – A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

Swap – A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Swissy – Market slang for Swiss Franc.

 

 

Technical Analysis – An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Tick – A minimum change in price, up or down.

Tomorrow Next (Tom/Next) – Simultaneous buying and selling of a currency for delivery the following day.

Trade Balance – Measures the difference in value between imported and exported goods and services. Nations with trade surpluses (exports greater than imports), such as Japan, tend to see their currencies appreciate, while countries with trade deficits (imports greater than exports), such as the US, tend to see their currencies weaken.

Transaction Cost – the cost of buying or selling a financial instrument.

Transaction Date – The date on which a trade occurs.

Turnover – The total money value of all executed transactions in a given time period; volume.

Two-Way Price – When both a bid and offer rate is quoted for a FX transaction.

 

 

UK HBOS House Price Index – Measures the relative level of UK house prices for an indication of trends in UK real estate sector and their implication for overall economic outlook. This index is the longest monthly data series of any UK housing index, put out by the largest UK mortgage lender (Halifax Building Society/Bank of Scotland).

UK Producers Price Index Input – Measures the rate of inflation experienced by manufacturers when purchasing materials and services. This data is closely scrutinized since it can be a leading indicator of consumer inflation.

UK Producers Price Index Output – Measures the rate of inflation experienced by manufacturers when selling goods and services.

UK Claimant Count Rate – Measures the number of people claiming unemployment benefits. The claimant count figures tend to be lower than the unemployment data since not all unemployed are eligible for benefits.

UK Jobless Claims Change – Measures the change in the number of people claiming benefits over the previous month.

UK Average Earnings Including Bonus/ Excluding bonus – Measures the average wage including/excluding bonuses paid to employees. This is measured QoQ from the previous year.

UK Manual Unit Wage Costs – Measures the change in total labor cost expended in the production of one unit of output.

Unemployment Rate – Measures the total workforce that is unemployed and actively seeking employment, measured as the percentage of the labor force.

University of Michigan’s Consumer Sentiment Index – Polls 500 US households each month. The report is issued in a preliminary version mid – month and a final version at the end of the month. Questions revolve around individuals attitudes about the US economy. Consumer sentiment is viewed as a proxy for the strength of consumer spending.

Unrealized Gain/Loss – The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains’ Losses become Profits/Losses when position is closed.

Uptick – a new price quote at a price higher than the preceding quote.

Uptick Rule – In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

US Prime Rate – The interest rate at which US banks will lend to their prime corporate customers.

 

 

Value Date – The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.

Variation Margin – Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.

The VIX or Volatility Index – Shows the market’s expectation of 30 – day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge”.

Volatility (Vol) – A statistical measure of a market’s price movements over time.

 

Wedge Chart Pattern – Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge are incrementally less, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically conclude with a downside breakout, and descending wedges typically terminate with upside breakouts.

Whipsaw – slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Wholesale Prices – Measures the changes in prices paid by retailers for finished goods. Inflationary pressures typically show up here earlier than the headline retail.

 

Yard – Slang for a billion.

 

What is currency trading? Well, at its simplest it is exchanging one currency for another, just as you might do when going on vacation to another country. You sell your currency for the money of the pl;ace you are going to.

However, when people talk about forex (foreign exchange) trading or currency trading on the forex market, they generally mean something very different. In this case traders are constantly exchanging one currency for another (buying currencies and selling others) with the aim of making a profit when the exchange rates change.

It is a little like trading in stocks on the stock market. Stock traders usually buy and sell stocks very quickly compared with the average personal investor who will take the advice of a broker but often keep stocks for years or even decades.

How Does Currency Trading Work?

The best way to demonstrate how currency trading makes money for the traders is to use an example.

Let's say the current rate on the British pound to euro forex market is this: GBP/EUR 1.1200. That means that to buy one British pound you will need 1.12 euros. If you believed that the value of the euro was going to rise compared to the value of the pound, you might sell 100,000 pounds, buy 100,000 euros, and wait. Then let’s say a few days later, the exchange rate has moved to: GBP/EUR 1.0600. Sure enough, the pound is now worth only 1.06 euros. Now if you sell your euros and buy back 100,000 pounds, you will have made a profit of 6% of your investment, less any fees.

This sound like a lot of money. Who has 100,000 pounds or even dollars lying around in the bank to trade with? Not me, and I guess not you either. But fortunately, you do not have to have all that money for real. You are buying and selling at the same time, so all you need to have is enough to cover any loss that might be made before you could exit the market if your prediction was wrong and the currency that you bought started to fall. Your broker loans you the rest.

This is known as trading margins. On a $100,000 trade the margin is usually 1% or 2%, i.e. $1,000 or $2,000. This is the money that you must have in your forex brokerage account.

The amount you trade is determined by ‘lots’. A lot may be worth $10,000 or more depending on the currency and the Forex broker. So if you want to trade $20,000 you would trade 2 lots and so on.

There are now limited risk accounts, where you can only risk the amount of cash you have on account with the broker, thus avoiding margin calls. This is done by allowing smaller players to trade forex using ‘mini lots’ or fractions of a lot. So you can trade $1,000 by trading 0.10 of a lot. This reduces risk but may cost more to trade.

More and more ordinary people are getting into Forex trading these days. It has certain advantages over the stock market and even if you know nothing about valuation of the different currencies you can set up a forex trading robot, a complex software program that will trade for you according to the settings you choose. Keep in mind that it is a risky business and capital can be lost as well as gained. Knowing what is currency trading gives you an idea of whether you want to take the next step towards becoming a currency trader.

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Until recently it was a fairly simple process to figure out which FOREX broker was best for you as there were only a handful available.  With the rise of the internet and the explosive growth of FOREX trading, the number of FOREX brokers has skyrocketed.  It may seem overwhelming given the sheer number of FOREX brokers available to you, but by carrying out some simple research and doing your due diligence you will be able to pick a FOREX broker that’s right for you.

It might be a good idea at this point to back up a bit and understand what a FOREX broker actually does.  Basically, a FOREX broker is a person or group of people that carry out trades for an investor.  The nice thing about using a FOREX broker is that they don’t charge any commission per trade like you see with the stock market.  Instead, FOREX brokers make their money by taking the difference between the bid price and the ask price of the currency.  Be wary of brokers that take too much of that spread as their fee as it can affect your profit margin.  Ideally you want a FOREX broker that charges 2-3 pip spreads, and definitely avoid any that charge anything higher than 5-pip spreads.

Probably the most important factor to look for when choosing a FOREX broker is whether or not they’re regulated.  Any U.S. based FOREX broker should be registered with the Commodity Futures Trading Commission (CFTC) and should also be a member of the National Futures Association (NFA).

You can visit the NFA’s website at http://www.nfa.futures.org/basicnet and look up any FOREX broker you’re interested in.  Make sure you deal with a broker that has a clean record and has solid company financials.  Any FOREX brokers that don’t meet either of these criteria should be stricken off your list of candidates!

Customer service is an absolute must when deciding on a FOREX broker.  The FOREX market never sleeps, meaning you can trade any time of the day or night.  It’s very important that any FOREX broker you choose have customer support staff that can be reached at any time, and provide assistance on very short notice.  Take note of any positive testimonials on their site that reference the speed and reliability of their customer service, but also visit search engines and try to find other sources that may have written about their experiences with customer service.  Good customer service can make a huge difference in your online experience with FOREX brokers, so it pays to do your research.

Find a FOREX broker that offers a trading platform you’re comfortable with.  The vast majority of brokers offer both web-based applications and downloadable applications.  The web-based platform allows you to connect from any computer in the world that has internet access, but can be slower than its downloadable counterpart.  The latter has speed on its side, but can only be run from the computer it’s installed on.  Whichever you choose, make sure the platform offers at least the basics, such as real-time quotes and up-to-date account information.

The criteria listed above are the essentials to choosing the right FOREX broker for you.  Other services offered by the broker can be considered icing on the cake, but depending on your situation may also be viewed as critical to your decision making process.  Some other factors you may want to consider are the minimum account opening deposit, timely execution of your orders and free charts and analysis.

For those using MetaTrader to trade with Expert Advisors (EA). One of the main problems have been having lately is brokers playing “dirty tricks”. By that, I mean that some brokers will do whatever is in their power to stop the EA (such as the popular FapTurbo) from trading as it should be trading. One example is increasing the spread.

 

Of course, that does not apply to every broker. BUT… it is hard to know which are the honest ones. You may want to look at the list of the EA friendly Forex Brokers.