Learning to trade Forex is not unnecessarily difficult; however, there are definitely some items to be aware of and instructions to follow. Before you start any trades, you obviously need to locate and build a relationship with a broker to execute the trades.

As with doctors, lawyers, and other professions, there are a multitude of Forex brokers you can select from.

To help you choose, here are some factors to consider:

Minimum Spreads – Unlike standard stock trading brokers, Forex brokers do not charge any commission on transactions.

They earn their income from what is called a spread. The spread is simply the difference between the buy and sell price of a currency at a given time.

As you locate and research brokers, you should find out what spreads they charge. The smaller the spread, the less it will cost you to trade Forex.

This is the same rule as with traditional runners. The higher your commission on trades, the lower your profit at the end of the buy and sell transaction. You should choose a Forex broker that offers a low margin.

Compliance and reputation: Traditional stockbrokers generally operate through their own brokerage houses. Forex brokers, however, are usually affiliated with a large bank or other financial institution. This is due to the significant capital sums required. Also, you need to confirm that the Forex broker you choose has the proper license and registration.

Forex brokers must be registered with the Futures Commission Merchant (FCM). In addition, they are Regulated by the Commodity Futures Trading Commission (CFTC).

You can locate and verify the record as well as other facts and background at the CFTC

You certainly want to hold and trade through a broker affiliated with a reputable bank or financial institution.

Information and Research Tools Available: Like traditional stock and commodity brokers, Forex brokers maintain various types of websites, trading platforms, and portals for underlying information and research.

The sites must provide you with real-time information, current charts, technical information and comparability, and other relevant data. A good Forex trader will also maintain the ability to trade on different systems. As with any major financial endeavor of this type, request free trials so you can evaluate the Forex broker’s various trading platforms. Forex brokers must offer a wide range of information, hours, tools and other supporting features and records.

The bottom line is finding a broker that provides you with all the tools and services you need to be successful.

A Variety of Leverage Options – To be successful in Forex trading, take advantage of price differentials on your trades. Price differentials are minimal to as little as a few percent of a penny. However, you are using more of your actual capital borrowed from the broker to make the trade, which is how you leverage larger amounts for your trades than you actually have in cash.

This allows you to make money from small price deviations. As an example, if you are leveraging at a ratio of 100 to 1, this means that for every one of your dollars that you are trading, you are borrowing 100 from the broker.

The vast majority of brokers will allow you to leverage up to a ratio of 250 to 1.

However, you should be careful because the leverage ratio is directly related to risk. The higher the Ratio, the more money you are borrowing from the broker. While you can make more profit from trades, you can also lose more if the price movement is not in your favor. This Risk-Reward Assessment is based on your own principal amounts and your tolerance level for profits and losses on Trades.

If you have a lot of capital, leveraging a higher amount is not a big concern. However, brokers offer a plethora of leverage ratios and you are bound to find one or more to suit your financial desires and limitations. Even if you have a fair amount of capital and can accept a certain amount of risk, you may not want to leverage a large amount if the market becomes volatile, such as with exotic currency pairs.

Account Types

– You will need to open an account with a broker to execute trades. There are a variety of account types you can maintain.

The lowest account is called a mini account. It has a low minimum opening balance requirement of approximately $300.00.

A mini account gives you the highest leverage ratio since you are using a small amount of capital to execute larger sums in your trades. Apart from the mini account there is a standard account. That type of account provides a multitude of different leverage ratios. It has a higher minimum balance to open of approximately $2000.00.

Finally, another type of account that brokers offer is a premium account.

These require substantially higher minimums to open. They also offer you multiple leverage ratios and give you access to additional platforms, tools and services.

As you evaluate and choose a broker, look for one that has the right mix of accounts, leverage, information, and services for your financial requirements and circumstances.

Stay away from disreputable brokers –

As in any profession, there are good and bad representatives. Runners are no different. Some are reputable and some are the ones you just want to avoid. These are the brokers who do not have your best interest at hand and simply buy early or sell near a preset price point to increase their own profits.

These brokers will collect a fraction of a cent every time against your trades.

None of the brokers you review will ever admit to such trading, but there are methods to determine if you are considering a broker that engages in this practice. You can talk to other brokers to get their opinion on one or more you are considering. You can ask if they know the trading propensity of the brokers in terms of buying and selling near the price points.

There is no organization that tracks this type of activity. You can try searching the internet for discussion forums or messages that might reveal certain brokers and their trading activity.

Take a look at a full four hour video course if you’re ready to jump into the dream approach today.