Finding A Good Online Forex Trading Broker

A competent online forex broker is a necessity for trading in the Forex market. A forex trading broker is someone who will execute the trades for you and will get a commission on a per transaction basis. In all probability, a foreign exchange brokerage firm will be the one to do this for you.

Given the large number of brokers in the market, choosing one is a difficult task. The following criteria will help you to choose a good forex broker.

1. Cost per transaction. A Forex broker is paid the difference between bid and ask. No more, no less. Additional charges however can be levied for client access to special studies and other opt-in services.

Of course the smaller the bid/ask spread, the more it favors you. The spread varies among brokers as well as between currency pairs, so be sure to check their posted rates before making a decision.

2. Available Currency Pairs. Your online Forex broker of choice must have the seven main currencies which are the AUD, JPY, CAD, EUR, USD, CHF and GBP. Should you intend to trade the Danish krones or New Zealand dollars, verify that the forex broker deals in these currencies.

3. Instant Order Execution. The currency market is volatile and your orders must be executed instantly or else your losses or profits can be adversely affected. While delay may sometimes help, this is neither desirable or predictable. Your broker must be able to execute at the price you are currently viewing. Though delays do happen once in a while, more frequent occurrences could mean that it is time to change brokers.

4. Freebies. Technical analysis and charting tools are essential to analyzing currency prices, spotting price trends, as well as determining when to enter or leave the market. These basic tools should be offered for free by your broker, with more advanced tools available, even if they come at additional charge.

5. Minimum Amount to Open an Account. Being a small investor, you must seek a broker with a small account opening requirement. Mini accounts can be opened for just $300 with many Forex brokers.

6. Margin Requirements. The smaller the required margin, the greater your leverage. For example, a leverage of 100:1 can allow you to trade 1,000,000 with only $10,000 down. This margin can be used to make substantial profits. Remember that it works the other way too, and using margins unwisely can result in big losses.

7. Excellent Customer Service. Most traders will not pay much attention to this but the wrong choice can rear its ugly head when they really need some help. The best brokers are sensitive to their clients needs and will respond rapidly to your concerns. 24/7 phone and email support is a must.

8. User-friendly Software Interface. A proprietary program for installation on client PCs is used by some brokers. Web based direct trading is used by others. Try out more than one forex broker by using demo accounts for free. While trying out the system with virtual money, you can evaluate and determine the better system for your needs.

Here are our reviews of a couple of online forex brokers. Try them out to see which one works best for you:

1. Easy Forex Trading

2. ForexYard