What is a Broker?
A broker you can be an individual or company, which will provide us a service of bur and sell of currency orders depending on which the operator decides. These companies or people also are known like Commodity Brokers
These companies logically charge us to provide the service of buy/sell of currencies charging us a commission, this commission is the Spread.
Often the persons who works for the company is confused as a broker but the name will be "Registered Commodity Representative".
Regulatory Organizations
The Brokers is regulated by agencies and therefore it is important that you inquire in which agency is regulated your broker. Now, as already we said Forex is a “not regulated” market and by as much the regulation of those agencies they are considered "reactive", it is well to say, just after you had lost the money that you have place in the broker is when you will be able to do something.
In the United States, a broker it would have to be registered in Futures Comision Merchant (FCM), with Commodity Futures Trading Commissión CFTC)and of course with NFA (Nacional Futures Association). As much the NFA as the CFTC was created with the purpose of avoiding frauds, manipulation, as well as any other abusive practice.
If you wish to inform if a broker is registered in the CFTC (Commodity Futures Trading Commission), as well as to verify as it is history in the NFA of the broker that you are consulting you will be able to do calling to the 800-621-3570 or to go to website of NFA (Click Here), in the section Broker/Firm Information (Basic) which website is http://www.nfa.futures.org/basicnet/.
The NFA is one of the most prestigious regulatory agencies, their functions are essentially: Auditing and conducting surveillance of the members to enforce them, comply with the financial requirements of the NFA, to establish and enforce rules for the protection of customers, conduct as arbitrator of disputes regarding future, define acceptance or permanence of their partners.
The NFA is striving to educate investors to invest in Forex. To do so you can visit your page “What Investors need to Know”.
The NFA has developed a guide Forex Online Learning Program, which is an interactive program and self so that you learn how Forex, the risks of the trading Forex and the steps that would have to be followed before opening an account Forex . We must say that this programme of learning is free.
Another regulatory agency in the United States is the SEC (U.S. Securities and Exchage Commission).
There are other agencies, but not all agencies have the same regulatory standard, with some agencies more serious about conducting surveillance than others, then we give you a list of regulatory agencies:
Australia :
ASIC / Australian Securities & Investments Commission
Canada :
OSC / Ontario Securities Commission
Denmark :
DFSA / Finanstilsynet
Germany :
BAFIN / Bundesbank and German Financial Supervisory Authority
Japan :
FSA / Financial Services Agency, The Japanese Government
Switzerland :
GSCGI / Swiss Group of Independent Financial Advisors
Polyreg / PolyReg General Self-Regulatory Organisation
OAR-G / Organismes d'Autorėgulation
ARIF / Association Romande des Intermėdiaires Financiers
CFB / Swiss Federal Banking Commission
SFDF / Swiss Federal Banking Commission
United Kingdom :
FSA / Financial Services Authority UK
You should choose those brokers who are regulated, whose record is clean and are financially reliable. It will be better if you apart from the brokers that are not regulated.
Costumer Service
In any company, the customer service must be good so that they treat to you as they must treat to you. In the forex market, a market of 24 hours, this service is essential. So be sure you can contact them by phone, email, chat, IM, etc. ... And of course as companies pass on physical (department stores, shops, etc. ...) the quality vary from a signature to another firm, make sure that you first have a good quality of response, which indicates a good Customer Service.
Online Platforms
For an online broker can operate needs a platform, because without that platform operators could not do anything, so if you want to operate with that broker you will have to download the software that will provide the broker to operate. But it is best to try with several brokers before starting demo accounts, and thereby to see the options that are available and each broker familiar with the platform, until you decide which platform you are comfortable to operate.
You will have you consider some details of the platform broker, it is necessary for you to see real-time quotes, and that the execution of an order is instant, the broker must also show a summary of your account, your account balance with the losses or profits that you can have, the margin available, the margin used in open positions.
Platforms Types
Each broker may have different software, but there are two kinds of platforms, those that run on Java or website through which you have to download.
The Java Platforms that run on the Web do not need to be installed on your computer, allowing you to connect from any computer without having to download the necessary software. Many operators prefer this type of platform, considering them safer and more reliable since these platforms are not attacked by viruses or hacked.
Downloables Platforms need to be installed on your computer, letting you alone operate, if you want to operate from another computer will need to download the platform again. One of the weaknesses of these platforms is that your computer can be attacked with viruses or hacked. Another point to keep in mind is that these platforms need to be updated from time to time, hence the need to update software.
However, a broker deemed should be good to offer real-time quotes, as well as an instantaneous execution of a warrant.
Broker Policies
Each broker will establish their policies, which you should take into account whether you agree or not. Not all brokers have the same policy, so we are going to give you some general policies:
Currency Pairs Available: The broker must provide the 7 major currencies handled (USD, JPY, GBP, EUR, CAD, CHF and AUD).
Transaction Costs: Transaction costs are expressed in pips, the more low pips required by the broker, the operator will get a greater benefit.
Margin Required: How is the lowest margin required (this means greater leverage), the opportunity to reap greater profits and losses will be greater. The margin percentages vary from broker to broker, and may range from 0.25% and above. The low margin requirements are fantastic if your orders are good, but they are very bad if they are bad.
Size Minimum Required to Operate: Refers logically lot size required that varies from broker to broker may range from 1,000, from 10,000 to 100,000. A batch of 100,000 is a lot known as "Standard". A batch of 10,000 is a lot known as "Mini". A batch of 1,000 is a lot known as "Micro". Some brokers allow fractions of a lot, which allows you to establish what you want to buy.
Swap: As we explained in the swap is the difference of interests of base currency and the quote currency. The biggest difference is the interest of the currencies of the pair, the greater the Swap received or paid. It is also known to this as "Rollover" or "Overnight Interest."
Interest Rate: There are many brokers who pay interest on the margin available in the account. Interest rates may vary depending on the rates in the nation. For example, if you want to take a break when it comes to operate, money that take into account the margin of your keep on earning money. Some brokers do not allow you earn interest unless you have a margin requirement of at least 2%.
Trading Hours: Normally the brokers down his schedule that usually coincide between Sunday at 5 pm EST and Friday at 4 pm EST.
From all this, we have to conclude that is what we look for in a broker.
First, we look for a broker that this regulated by any agency, and stay away from those that are not regulated.
We look for a broker who has a small spread, because the smallest is spread the greater our benefit will be. But not everyone can open large accounts, which is why it is good to find a broker whose minimum is too low and will allow us to open an account with a minimum $ 250 Micro (We recommend it for $ 1000 or $ 1500).
As we said when looking for a broker, broker need that executes orders instantly, because sometimes time is very important, so you can not lose time.
Another point to keep in mind is that the broker has graphics and Technical Analysis tools, you need a broker that you enjoy good quality graphics.
It is also necessary to consider Leverage, as this is an important point. A good serious 100:1 leverage accounts for "Standard" ($ 100,000) and accounts for "Mini" 200:1 ($ 10,000).
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