No one can trade the currency market, or forex market, on his own. In order to trade in this market, you need to find yourself a good, reliable broker. Unfortunately, not all forex broker are honest and give good conditions. Some of them are just scams. To find a good forex broker, you need to go through some criteria which distinguish the good brokers from the bad. Here are some criteria to check before signing up with a broker.
The first criterion is the technical support provided by the broker. Everyone, even experts, runs into trouble when trading. The only way to go through those problems is a decent technical support. A dedicated support team also shows that the broker is standing behind its promises, that it is a serious company, and it cares about its traders. Without a good technical support, a broker is pretty much useless.
Minimum initial deposit is also an important factor to check before putting your hard earned money in the broker's account. Some brokers require you to invest as low as $ 25, while others require thousands. As a general rule of thumb, it is good to deposit at least $ 500 or $ 1000 before starting to trade, but if you are short on money, pick a broker that offers the best depositing conditions for you.
Leverage is also a matter to check before picking a broker. Leverage is your ability to open trades that are beyond your initial investment. For example, a leverage of 1: 100 allows you to open a trade of $ 100,000 if you have only $ 1000. This allows you to make profits that are much beyond your usual abilities. However, there is also a greater risk in such activity. Make sure your broker offers enough leverage to suit your needs, but don't be lured by high leverage such as 1: 500, which can be deadly for inexperienced traders.
The spread is a critical factor to consider when choosing a broker. The spread, also known as bid-ask spread, is the difference between the buying price and the selling price at a given moment. The bigger the spread, the more the exchange rate needs to move in your favor in order to break even. When you choose a broker, make sure the spreads are very low on the major currencies under normal market conditions. Anything higher than 6 pips is blatant stealing and should be avoided.