Essentially one can trade in the Forex market in four different ways. It can be done manually by the trader himself, using a managed account provided by the brokerage firm, using Forex forecast signals or with an automatic Forex trading system. A relatively new trading approach in Forex trading, an automatic Forex trading system provides a trader the benefit of automation as well precision execution of trades.
Before you can begin trading in Forex,
you will need a trading account with a Forex trading company or brokerage firm. The Forex trading company will be the party that will execute all your trading orders. As compared to brokers dealing with the stock market, Forex trading companies do not charge commission for their services. How Forex trading companies earn for their services is by charging a “spread” on the currency pair that you are purchasing. Today, with the mushrooming of online Forex trading companies, one can easily be confused as to which Forex trading companies to sign up with.
Selecting the correct Forex trading company will require some research and time into the background of the company in question. Although it may take some additional effort on your part to find out about the services offered and the range of “spread” charged by these Forex trading companies, this effort will be worth it in the long term as you need to be fully satisfied with the party that you are closely working with in all your trading.
In order to give you some direction as to what to look for in a Forex trading company, below are some guidelines that you can follow to help you scrutinize the Forex trading companies that you are interested in.
Check if the Forex trading company is registered with a regulatory body
The quality of their customer support
Evaluate the online trading platform that they provide
The types of account that they have
The policies of the company
Regulatory Bodies
Said to be largely unregulated market, investors who get swindled out of their money by unscrupulous Forex trading companies will not have much remedies for their losses. As such, it is important that you select reputable Forex trading companies that are registered with an independent regulatory body. More information regarding regulated Forex trading companies in the US can be obtained at the website www.nfa.futures.org/basicnet/. In Australia, the Australian Securities & Investments Commission (ASIC) is the regulatory body that is in charge of regulating financial companies. Their website is at http://www.asic.gov.au/asic/asic.nsf.
Customer Support
Because you are dealing with a 24 hours trading environment, your have to ensure that the Forex trading company that you are signing up with also provide you with 24 hours technical support. Because it is your money that is at stake, you must not compromise on this prerequisite. Ensure that you are getting “live” support and not a recorded “voicemail” on the helpline.
Evaluating the Online Trading Platform
The foundation of any online trading platform is its ordering system. Ensure that the system have real time viewing of the exchange rates. Also the system must provide a summary of your trading activities in order for you to be able to get a snapshot view of all your investment positions.
Types of account available
There are basically three kinds of account that a new trader can open with a Forex trading company. They can be a “Micro Account”, “Mini Account” or a “Full Account”. Micro or Mini accounts are especially recommended when you are just starting out in Forex trading as they allow you to trade on a smaller scale.
Company Policies
Before you sign up with any Forex trading company, you should also check their policies and well as any terms and conditions they might have. This includes checking:
The currency pairs that they deal in
The transaction cost like the “spread” and rollover charges
The margin requirement
Their working hours
Interest rate they charge for utilizing the margin facility
Finding the right Forex trading company to deal with is one of the first steps towards venturing into the Forex market. As such, it very important that you take your time to evaluate each and every one of the Forex trading companies that you shortlisted.
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