Choosing a Broker and Opening an Account

You’ve probably seen many advertisements for Forex brokers as you’ve investigated currency trading online. Some of their gimmicks range from informative to ridiculous; however, these advertisements serve a purpose, as you will eventually need to sort through them and open an account with a reputable Forex broker in order to start trading.

Generally speaking, a Forex broker will help execute currency trades for you in a similar manner to a stockbroker. You will decide which currency pairs you would like to purchase or sell and then conduct the transaction through the broker. Brokers earn money by charging a commission or a fee for their services and/or through the bid/ask spread.
In order not to feel overwhelmed by the number of Forex brokers available on the internet, you will need to do a fair amount of research. We intend to help you establish criteria for your decisions and what you should expect from a broker. Once you pick a broker, you can open an account and start trading!

Is Online Trading for You?

Forex trading is typically not conducted in an off track betting-like venue where you walk up to a cashier and exchange money underneath a plate of bulletproof glass. Instead, the majority of transactions are carried out online through a broker’s trading platform.
The question you need to ask yourself is whether you feel comfortable trading currency online. If not, there are brokers who will execute trades for you over the phone (and some, gasp!, in person). However, trading online offers several benefits including 24/7 availability, research tools, real time quotes, and quick execution of trades.
Our advice is geared towards online trading since, well, we’re a Web site, and additionally, because we like the advantages online trading offers. Most of the advice in this article will also help you if you choose to trade using a traditional broker.

Not all Platforms are Created Equally

The trading software offered by Forex brokers is one of the most important factors for your decision on which broker to use. This software (also referred to as a trading platform) will enable you to research currency pairs and place orders.
Most brokers will allow you to open a demo account (more on that later), so that you can test drive their services before signing up and executing real trades. There are several things you should consider when examining a broker’s software:

• Ease of Use: Is the software intuitive and easy for you to use? A system could offer many features, but if you can’t find or figure out how to use them then they are worthless.
• Account Information: A good system should display your balance, available margin, and your gains/losses. This will enable you to manage and track your trades efficiently.
• Real-Time Quotes: One of the main advantages of trading online is the capability to view real-time quotes. You don’t have to worry about delays and guess at what price your order will actually be placed.
• Instant Execution: Along with real-time quotes should be the instant execution of a requested trade. Many systems will offer a point-and-click interface to easily place trades. It is important that your broker’s system doesn’t re-quote the currency pair when you place an order.
• Technical Analysis Tools: Most online Forex brokers will offer some sort of charting and analysis software. Make sure that the tools offered suit your needs and can be used effectively.

One last thing to mention when discussing online trading is the necessity of a broadband or high-speed connection. It’s time to say goodbye to the days of dial-up once and for all (old AOL CDs make great coasters). Plus, if you’ve got enough money to comfortably trade currency, then you’ve got enough to afford high-speed internet.