| If you've already made the decision to go ahead and | | | | understand that it is the fastest way to big money. |
| start trading forex, the first step you need to take is | | | | Reputation of the Firm. All forex brokers should be |
| to choose the right forex broker. Currency brokers | | | | registered with the Futures Commission Merchant and |
| vary more than the U.S. Investment houses, so you | | | | the Commodity Futures Trading Commission. You |
| really need to do your homework before making a | | | | should verify that your potential forex broker is in |
| decision. This is very important because your broker | | | | fact registered before giving them any money. Also, |
| is almost like your business partner. They need to | | | | because of the massive amount of capital required in |
| not only treat you fairly, but also execute when | | | | the foreign currency market, brokers are usually |
| called upon. Here are some of the most important | | | | owned or operated by large banking institutions. |
| aspects to consider when picking your broker: | | | | Verify their financial stability to ensure the safety of |
| Low Spreads. Always look for a broker that offers | | | | your investments. |
| low spreads (which are measured in pips). The spread | | | | Account Types Available. Small investors should look |
| is the difference between how much you can buy or | | | | for brokers that offer mini accounts. A mini account |
| sell a currency at a specific point in time. It's very | | | | usually offers a high amount of leverage (otherwise it |
| similar to the bid and ask prices in the stock market. | | | | would take decades of successful trading to grow |
| Since you don't pay a commission to a forex broker, | | | | $300 into anything significant). Every broker should |
| they make their income through the spread. You | | | | have standard accounts which need $2000 to start |
| don't get anything in return for paying the spread, so | | | | the account with and offers more leverage options. |
| you'll save money on each trade if you pick a broker | | | | The third type of account is a premium account, |
| with low spreads. | | | | which will offer access to more powerful tools, |
| Amount of Leverage Offered. Leverage is essential | | | | services, and research. The amount of capital needed |
| to making big money in forex. When you're making a | | | | for a premium account will vary based on institution. |
| profitable trade, the amount of "increase" in what | | | | Quality of Tools and Research. Just as in online stock |
| you're holding amounts to just fractions of a penny | | | | trading accounts, the quality and availability of tools |
| per unit. So if you're not investing tens or hundreds | | | | and research will vary greatly between brokers. Most |
| of thousands of dollars, your total gain is minimal. To | | | | will have real time charts, news, & data, along |
| make a stock market comparison, assume that you | | | | with technical analysis tools. Some will have expert |
| buy $5,000 worth of a stock for $20. A few hours | | | | analysts writing articles and reports. You can look |
| pass, and you sell it for $20 1/8. Total gain? A barely | | | | these analysts up on Google to see how credible |
| noticeable $31.25. Now lets say you were able to | | | | they are. Also look for technical trading tools, |
| borrow your brokers money, and buy $500,000 | | | | economic indicators, and good customer support. I |
| worth of the same stock. Your gain would now be | | | | suggest starting a demo account at several brokers |
| $3,125, which is much more substantial. An equity | | | | to get a feel for their platforms and see what type |
| broker would never give you that much margin, but | | | | of system is most comfortable to you. |
| you can find some forex brokers who will offer as | | | | Choosing a forex broker is a very important decision, |
| much as 100:1, which means that you can borrow up | | | | so take your time and do your due diligence. If you |
| to 100 times the amount of your own capital | | | | end up with a good one, you'll have everything you |
| invested. Obviously, this can be risky because you | | | | need to succeed and will be able to focus solely on |
| can lose money as well. Do your homework on how | | | | trading the forex. |
| margin and margin calls work before using it, but | | | | |