Shopping For The Best Forex Broker

Selecting the best forex broker is very much like shopping for clothes - you have to do a bit of window shopping - and try on for size - before you find the right one for you.

The window shopping part is essential - ultimately because the forex broker is the one person or company in the world that will handle your forex trade henceforth from the date of your actual sign up. They're all up to giving you advice on the best time to buy and sell a currency in the forex market, but ultimately, they're just executioners of your own free will.

Unlike the typical broker that earns by commissions or broker's fees, the forex broker earns his keep in the spread - or in the difference of the buying and selling price of a currency.

Forex has exponentially edged all other financial markets to date. On any given day, the forex market handles up to $1.3 trillion in transactions. Part of the lure of forex is that you trade on a margin - or trade as much as 100 times your actual investment.

In choosing a forex broker, check out what financial institution your forex broker is associated with. Association with an international bank only means that your forex broker can draw out the necessary funds that would allow you to trade on a margin.

Before anything else though, check to see if your forex broker is licensed to broker a trade. A license can help protect you against fraudulent and abusive trading practices.

Of course, your best references on the character of your broker are your family, friends and close associates. Talk to them - it won't hurt if you ask who their forex brokers are and if they only have high praises for them.

Next to character, you might also want to find out your forex broker's fees, i.e., spread, or if there is any other fee you have to pay. Your online forex broker should also be able to automatically execute your profit or loss margin.

As to the actual trade - you might want to try your forex broker's demo account. Actually, it is actually the best way to get a feel of the forex market because you would still be subject to the same profit or loss without getting any real money involved. Also, you would be able to try out the tool options available on the trading software being used.