A FOREX JOURNAL

Having a good forex broker is extremely important. But for those who are new to Forex trading, choosing a forex broker can be outright confusing. This is because there are currently so many of these brokers out there and each claims they are the best. So what should a new traders look for when choosing one?

1. Regulation
In my opinion, this is the most important factor a trader should first look at when choosing a broker. You should always choose a broker that is conducting business in a country where their activities are monitored by a regulatory agency of that country. I am sure no one wants to put their money into a forex broker that will suddenly cease its operation the next day.

2. Capitalization
Most regulatory agency required forex brokers to have a certain amount of net capital for their operation. Brokers who failed to meet such requirement can be forced to close down so it is important to check if the broker you are with has that capitalization that meet the requirement. For a complete list of U.S. broker capitalization, you may visit this link http://www.cftc.gov/marketreports/financialdataforfcms/

3. Spread
The difference between Buy and Sell price of a currency pair at a time is called a spread. This differences is how a broker makes their money. Some brokers promote fixed spread while others exercise variable spread depending on liquidity in the market. It is thus extremely important that you know how much spread your broker is charging per trade and how competitive is it compare with the other brokers in the market.

4. Trading Lot Size
There are some forex brokers out there that allow you to trade as little as only 10 or even 1 dollar. This is important because these brokers allow you to trade in a very small amount and if you are a beginner, you really should start small until you get the hang of things.

5. Interest Policy
Some brokers adopt an interest rate policy for open position while some don’t. How this interest work is for eg. you have a buy position on AUD/USD and you hold it overnight, some brokers will calculate the difference in interest between these 2 currency and pay you the difference. In this case since AUD has a higher interest rate than USD, you get pay for some interest. However note the opposite can happen. If you happen to sell AUD/USD and has it open overnight, you have to pay your broker the difference in interest.
Now since some brokers adopt such interest policy and some don’t, it is thus to your advantage if you made use of this info for your trade.

5. Support
Does the brokers you are looking at has a local office? This is quite important especially when you need any kind of support. Some brokers would even assign personal account manager to you but it really depends on how much money you have with them to get such kind of services.

6. Other Features
Because of the advancement of technology, most of the forex brokers are offering features not just related to a simple trading platform. Some would offer also instant financial newsfeeds, excellent charting, allow automated trading programs eg. mt4 trading platfrom, and mobile trading platform for your handphone and mobile devices. So if you need any of these, check if your broker has them.

Hope the above list form a good checklist for you in selecting your brokers. Good luck and good pipping!