Forex. How to choose a dealing center?
It’s rare to meet a man who’s never looked for an extra income. Such a search sometimes takes different forms: someone just finds a second job, someone accumulates savings in the bank and tries to find more favorable conditions for making money, someone invests available funds more risky projects, one of the most popular of which has recently become the Forex market. Learning all the intricacies of currency trading, from the first steps to the end, is a very long and complicated process, so in this article we will take a small but very important part of it for beginners – the choice of a brokerage company.
Forex is an over-the-counter currency market, which in fact is a kind of link between different exchanges that operate at different times in different parts of the world, making the Forex market function around the clock 5 days a week. Trading on it is carried out via the Internet, and the interests of traders on individual exchanges are represented by intermediaries – dealing centers (or brokerage companies). They are the ones who organize the trade process and provide all the technical means of the process. Brokers accept online applications for opening positions on different currency pairs, collect them together and bring them to the market. As a rule, trading through dealing centers has a lower threshold of entry, it is available to more people than direct access to the exchange. In addition, dealing centers perform some other important functions: they provide their clients with leverage, thanks to which they can get more profit from trading, or provide it with all the necessary analytics for trading. We will not go into all the details of their work, each function of the dealing center should be considered separately
It is better to consider any dealing center through the prism of several criteria, the totality of which is worth making a decision on the choice of one or another for further work. Let’s consider the basic criteria
Non-trading risks are the risks associated with possible brokerage bankruptcy, fraud, misappropriation of your money and similar situations. There are many cases when under the guise of a broker the swindlers attracted traders and then just disappeared with their deposits. Given that all operations are carried out via the Internet, it is very difficult to find the ends afterwards. As a rule, non-trading risks are inversely proportional to the broker’s reputation. Widely known dealing centers care about their reputation, experience of work with them can be shared by a lot of people, and it is worth to orient oneself to beginner traders
A huge value in trading plays the value of the spread – the commission in points, which is taken by the broker for each of your trades. It’s clear that the lower the spread, the higher your profit. Besides the spread size, the potential limits of its change are also important. Sometimes it is better to have a fixed large spread than a floating spread with a small lower limit, but can be enlarged to any size. In order to better understand the role of this criterion, it is necessary to consider separately the examples of spread trading
Leverage is the ratio of trader’s own funds to borrowed funds. It is believed that the greater the leverage, the higher the risks. That’s not exactly true. Leverage depends only on the flexibility of opening new deals, and the level of risk depends on it. The greater the range of leverage options offered, the better
Support for trading platforms
The most popular platform for Forex trading is MetaTrader 4, which is supported by almost all brokers. But it doesn’t mean that there are no other platforms or nobody is interested in using them. Some traders eventually find more suitable programs for them, and the more such programs are supported by a brokerage company, the better
Account opening currencies
As a rule, most accounts with most brokers are opened in US dollars. However, some traders want to compensate for possible fluctuations in their home currency against the dollar, which can be done by opening a second account in another currency, which is not always possible. Therefore, the more currencies the broker offers to open an account, the better
Number of currency pairs for trading
There are both popular currency pairs with the largest volume of transactions and less popular ones. The latter are sometimes even more convenient in terms of speculation. The more currency pairs a dealing center offers to trade, the better
There are many such criteria, but in reality the determining factor is always the trader’s personal requirements and feelings of trading. Therefore, before deciding on any broker, it is necessary to determine what exactly you need, as well as try at least a few different dealing centers to have something to compare with. The longer you trade, the harder it is to change your broker, so it is better not to be lazy to make the right choice at once
On our site there is a powerful section – “Rating of brokers”, in which you can choose the company by criteria.