The goal of every forex trader is optimum profitability at the fastest possible time. There is no get-rich-quick scheme in forex trading. There are no forex brokers that can absolutely guarantee the best yields in every trade. Instead of jumping at those with empty promises, forex traders should choose their broker carefully to find one that is reliable and credible enough to help them reach their goals. To be able to do this, forex traders should thoroughly research their options and weigh their pros and cons objectively.
There are plenty of sources of information about the various forex brokers over the internet. You can easily be confused by the sheer number of brokers offering different trading services in a variety of packages. Put together a shortlist of brokers that interest you and examine each one closely. Anything that does not yield you much information should not be in your shortlist. Here are some of the questions that your research should answer about the forex brokers in your list:
- How long has the broker been in the industry? You do not want to settle for one that has not established a track record of successful partnerships with forex traders. You should be able to review historical data and past performances. Some brokers offer backtest and forward test facilities in order for you to check their data for accuracy. You should also be able to test their system with a demo account running on live data. Note, though, that demo accounts normally do not have all the bells and whistles fitted into real live accounts. Open your demo accounts in the amount that you intend to invest in your trading account and trade as you would a real account.
- What are other traders saying about the broker? Check about what other forex traders have to say about their experiences with each of the brokers in your list. Traders are often voracious forum posters with specific websites and chat rooms specializing in everything about forex trading. You can find a good website of expert traders and get more information about the specific brokers you are interested in. You can even ask these expert traders for their recommendations on the best broker for you to use. But, you have to remember that not every forex broker that works best for one trader would also work best for you. Get your information from several sources, compare them, and examine them versus your own personal needs to come up with the best choice.
- How much spreads does the broker offer? Forex brokers do not charge service fees, subscription fees, or transaction fees. They earn their keep from the spreads that they offer forex traders. The wider the spreads are, the more they earn from the transaction. Because of the automation of trading, the spreads have shrunk and traders nowadays are able to take advantage of narrower spreads giving them more opportunities for gain. What you have to look for in your research are repeated incidences of slippage. Reports of these incidences should be warning signs for you to stay away from the forex broker.