Welcome to currency trading broker
Forex Brokers. Current Trading Platform Problems, and Their Solutions
Here is some guidance on selecting your forex broker.
It is highly advisable to only open accounts with a regulated broker or bank ,as unfortunately their is no global regulatory agency to monitor the various activities of the worlds currency markets, each country may have different rules and regulations to another.
It is best to ensure that your broker is registered with the appropriate regulatory authorities in the country you wish to trade in.
The Commodity Futures Trading Commission in the U.S. for example has total jurisdiction over all activities in the Forex and Futures markets, and the banks themselves are supposedly monitored by the Federal Reserve Bank.
Competition between brokers is robust and this is generally good for the consumer.
There are two types of Brokering on offer;
The Dealing Desk Type: When you place a currency trade, the apposing trade is taken by the broker, and he is acting as a 'marketmaker' in the trade, and therefore has accepted full risk for the financial outcome of the trade, he may offer you fixed spreads, but your loss is his gain, he is unlikely to be robot friendly.
Brokers ECN Type:direct access to the market is offered by the broker, the spreads are not fixed, the apposing trade is held by Mutual Funds, Hedge funds, Banks,etc These brokers earn a commission payment on the volume of trades they accept, more customers, more trades, more money for him. They are more likely to be robot friendly, but don't bet on it!
The lower spreads value favour the trader and reduce the profit margins of the broker, so to maintain profits they must increase the number of trades, some brokers also increase spreads to reduce the number of trades being made by Robots.
Many robots attempt to hide evidence of their trading activities, and especially their stoploss positions, from the brokers, BUT NOW a software system has just been launched that GUARANTEES that all your FOREX TRADING ACCOUNTS and STRATEGIES are TAMPER-PROOF.
The availability of trading tools is fairly standard on Metatrader platforms, but upmarket advanced charting software programmes are available for varying monthly fee schedules, you simply search for the best, least cost, user friendly programme that meets your needs, you can always upgrade at a later date if you so wish.
Often times it is a good idea to commence trading with a minimum of indicators and learn the special characteristics of each currency pair, "indicator overkill" is a common problem!
Forex trading is a high risk business, treat it with respect, it is advisable to "learn to walk before you make any attempts to run"!
It may pay to ask if the broker is compliant with the new N.F.A. "no hedging" rule no doubt many traders are looking for ways around this ruling.
As of August 1st 2009 the NFA's new FIFO ruling has taken away ALL US based brokers abilities to place essential orders that you MUST have as a trader if you are to succeed.
Their is now available an ingenious script that plugs seamlessly into Mt4, and this interface contains all your possible potential orders, but they are not visible to the brokers, as the information remains on your computer.
How clever is this piece of software? VERY CLEVER! a MASTERPIECE of disguise , Pending orders are invisible to the broker, the trading stop can be moved to breakeven after a
given profit has been reached, your trailing stop can be added after a certain profit has been reached , to protect profits, and you can straddle the trades , HEDGING is still possible!
Most brokerage houses offer leverage values between 100:1 and 400:1( too high for the novice trader), and be sure they offer these facilities on standard and mini accounts.
Accessibility to assistance from brokers is important the closer to home the better, money transfer fees and regulations, currency conversions, and calling from a different time zone can be frustrating, time consuming and expensive.
This is a relevant consideration as some large brokers may transfer accounts offshore to circumvent the new N.F.A. regulations.