How to choose the broker for trade in currencies (Forex)?
the Industry of broker service in the financial markets exclusively competitively, exist tens and even hundreds of the companies providing similar services and at first sight almost identical. Nevertheless, it is possible to claim with confidence that only units from them are noteworthy the serious trader - so far as concerns your money, the full confidence in good reputation and intentions of the broker serving you is important. Criteria which should be considered at the choice of the broker are given below.
The size and a kapitalizirovannost
to function as the intermediary in your transactions, the broker has to have rather large volume of the capital, especially if he works by the principle a market - the maker, so acts as the opposite side at transactions of clients. Moreover, from available the broker of own means depends how good credit relations he is able to construct with the “suppliers of liquidity“ - banks and other large financial organizations what, in turn, directly depends on how favorable terms of transactions it will be able to offer to the clients.
is recommended to Work with the broker only if he is regulated by service of supervision of the financial markets of any country (if several countries is only plus at once). The broker company registered at the regulator and meeting its conditions and rules is always more preferable than the unregulated broker who in case of disputable situations with clients will be able to act as will like (= to allow it debate NOT in your advantage). Well and, at last, each regulator of the financial markets demands from brokers of a minimum level of the capital which maintenance allows to keep confidence that the company simply will not go bankrupt. On the website of the respecting broker the name of the financial regulator to which rules he submits has to be specified. Separately it is worth noticing that since 2009 all brokers registered in Switzerland (for example, Dukascopy and MIG Bank), are obliged to have the bank license that means still big reliability of client money.
Type of the broker
Sushchestvuyet two wide classes of broker systems: with the dealing center (Dealing Desk) and without (No Dealing Desk]). The dealing center is a technology at which the broker processes all orders from clients in the centralized system (which is called “the dealing center“, or “äåñê“), which directs them to the market. Spreads on tools are in that case fixed. Each Dealing Desk the broker is a market - the maker (English market - maker), i.e. undertakes to act as the second party according to all transactions of clients. A market - the maker quotes (offers) both the buying price (ask), and sales (bats) of the concrete tool. He undertakes risk of a continence of a quantity of these actions or currencies, and also the obligation to act as the second party in transactions both on a purchase, and on sale - for as earns reward in the form of spreads. It is worth meaning, however, that such system potentially allows - to the maker to manipulate a market quotations in own favor to earn from losses of clients. Therefore for the trader trading about a market - the maker, the reputation of such broker - the company which own reputation is important has paramount value, will not begin to be engaged in “zhulnichaniye“ to receive additional kopek, otherwise all clients respecting itself will run away from it. Trading accounts DD - like usually have low requirements to the initial deposit (to begin to trade often it is possible all with several ten dollars) and more friendly user interface.
The No Dealing Desk system works without the dealing center, directly connecting the trader and the financial market. Advantages of the real NDD platforms are stabler quotations (do not change in an installation time of orders) and a possibility of trade without restrictions at strong jumps of the market. The minimum deposit, however, most likely will be much higher (hundreds and thousands of dollars). The NDD systems are divided, in turn, into STP (English Straight Through Processing, Through processing) and ECN (English Electronic Communications Network, the Electronic communication network). The STP broker sends orders on purchase and sale directly on the interbank market, passing thus intermediaries and providing instant implementation of orders. STP systems can have access both to one, and to several banks - the more their number, the it is more favorable than a condition of execution of transactions for traders. In the ECN system in additives to the aforesaid orders from all participants - as individual traders (unlike through processing of STP), and banks - unite in the uniform market without participation of intermediaries that allows to receive the most favorable quotations according to each transaction in real time from the participants competing among themselves. Spreads on tools are not fixed, and for each transaction the small fee is charged. To have the right to be called ECN, the broker has to show all current active orders on purchase and sale (a so-called “exchange glass“), and also to allow each participant to disclose parameters of the orders and to reduce them with opposite orders of other traders. Account ECN as a rule have much higher requirements for the minimum deposit, but at the same time provide unsurpassed transparency and accuracy of transactions.
Support of clients
In the industry of a brokerage as, in principle, and in any other, the reputation is a matter of life and death. Therefore big brokers which “to have plenty to lose“, very much try to keep positive image and pay much attention to client support, and also provide to the clients various additional services, such as analytical sketches about the markets, consultation on technical questions and process of trade, competition of traders etc. Faces the choice of the broker to look on what channels support of clients is available: by phone, through online - a chat in real time, by e-mail and also to make sure that it works for all trading day (to actions it means all day long, to the market Forex - 24 hours a day).
Types of accounts
Many large brokers offer several types of accounts which can differ according to requirements to the minimum size of the deposit, trade conditions and type of access to the market. For example, pass - accounts allow to begin active trade, since several dollars, and standard accounts have higher starting deposit, but lower spreads or the commissions, higher shoulder etc. Besides, ECN systems are usually provided through separate type of the account on which minimum deposit is even higher, but there is a direct access with the market of interbank liquidity and other advantages given types of trade systems. In general, existence of several types of accounts definitely speaks well for the broker, and lack of a demo - the account already in general became a bad form.
The provided trading platforms
From functionality, intuitivism and reliability of a trading platform all your interaction with the markets depends, and it means that to its choice it is worth treating with due consideration. Sushchestvuyet two types of platforms - idny can use directly on the Internet, and others need to be downloaded and installed on the computer. It is difficult to tell what is better - the first type usually more reliable and it can be available from any computer in any point of the earth, however the downloaded platforms most often work quicker that is very important factor at active trade. Therefore to choose, what is more important, each trader has to for himself. Probably the trading platform, most popular in the world, is MetaTrader, “pure“ or “personalized“ (i.e. under the name) which version is provided by almost all brokers. It means that having learned to use it, you with smaller expenses of time will be able to change the broker if you want. Nevertheless, despite wide recognition of MetaTrader, the platforms developed by the broker can be more successfully “ground“ under certain traders or trade conditions (for example, the innovative eToro platform) therefore you should not dismiss them by no means.
A quotation and the costs
Well and by itself, before work with the broker will not prevent “to ask the price“ of the cost of services - whether the fee for transactions is charged, spreads (a difference between the offered market price of purchase and sale) for the tools interesting you - are how big and whether spreads are fixed; whether there is a payment for additional services, etc. At trade in the market Forex it is also necessary to pay attention to conditions of transfer of positions for the next days - so-called. swap or overnayt (English overnight, rollover, swap).
Questions of which it is worth thinking at the choice of the broker
- what my style of trade (position, a skalpirovaniye, intra day trade, etc.)?
- whether the broker supports types of orders necessary to me (limited, stop - loss, etc.)?
- how many own money I want to direct to trading?
- whether conveniently for me to use the provided trading platform?
- whether conveniently to deposit to the account / to withdraw money?
Evolve in traders!