How to find yourself the right Forex broker
What do you do when you want to buy clothes? Do you directly go to a farmer who grows flax or do you go to the nearest shop? Obviously, it’s the latter unless you are a rebel or make your own dresses. Currency trading works in a similar way. You don’t directly buy or sell currencies rather; you find yourself a broker who provides you with all the facility to trade.
But, if you are still new to this market and don’t know how to score a good broker, then read this article. Then you might find yourself a good broker! You never know!
Finding a broker can often be time-consuming and since there are many options these days. Some may even ask, ‘Where do I look for a broker? ‘But before we tell you the secrets, let’s first find out what a broker is. A broker is an institution that acts as a middleman between investors. Brokers also provide traders with trading platforms in which to work.
A broker’s role is crucial in trading as your trading career depends largely on the broker you decided to work with.
Types of broker
Here we will discuss the two major types of brokerage systems
Dealing desk brokers
These brokers, who provide services to traders through a dealing desk are known as dealing desk brokers. They are also known as market makers since they often take the other side of a client’s trade and execute trades for their own accounts.
Dealing desk brokers work to decrease the risk exposure of their clients and provide them with maximum liquidity.
This broker system tends to remain disciplined and provides smooth transactions to its clients even at rough times when the market becomes very volatile. Since they stick to these parameters all the time, sufficient transactions and your overall investment activities are assured.
In this system, a trader has little scope to learn about the market as transparency cannot be a hundred per cent guaranteed all the time. However, some high-end brokers in Hong Kong offers perfect conditions for trading. Click here to learn more about the professional broker.
ECN brokers are non-desk dealing brokers that facilitate trades for interested investors. ECN spreads are much narrower than dealing desk brokers and that’s why they tend to charge a fixed commission to the clients per transaction.
ECN brokers give their clients direct access to participate in the currency market. Since there are several participants in the ECN platform unlike dealing desk brokers, they tend to offer their clients tighter bids for trading.
ECN brokers offer more transparency to the clients even though they don’t directly participate in trading with the clients. ECN platform is a full online platform.
The benefit of using this system is that you can trade at any time. However, the biggest drawback of this system is that it is more costly than a dealing desk brokerage system which can affect a traders trading mechanisms.
Things to remember before choosing a broker
- Clear any misunderstanding between the margin and the leverage that the broker is providing you.
- Many brokers give various benefits and bonuses for the initial deposit. Check if your broker has a similar facility or not.
- Try to point out the quality of customer service a broker system provides before selecting one.
- Check if your broker provides you with you a fast, user-friendly, up to the date trading platform or not.
- Learn about the minimum balances you can deposit because the less you have deposit, the better.
Find your trading type
Before selecting a trader, it’s very important to find out what type of trader you are.
You can be a position trader who works on a long-term basis or you can be a day trader, working for a short amount of time. Depending on your preferred type of trading you should look for your trader. Even if you find a good broker, if you don’t know what type of trader you are, you won’t be able to make much profit out this endeavor.
You should keep in mind that each brokerage system is different and provides different facilities. So, look for facilities that you want at your disposal while trading. Based on that try looking for a good, suitable trader.