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Thread: How to choose a Broker?

  1. #1
    Junior Member
    Join Date
    Aug 2010
    Location
    South Carolina, USA
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    13

    How to choose a Broker?

    In this thread I am not talking about Brokers for Practice and Demo accounts as you should have already setting up and tried a few different ones.

    But how do you choose the Broker you want to use for your "Live" account.

    A lot will depend on the amount of money you are going to invest (read: lose, yes, get it in to your head, you can lose and big. The difference between playing with fake money and real money is big no matter how seriously you take the Demo account).

    Most of the Demo accounts use a standard Demo account of $50,000. This can be traded at standard lots (100,000 units) or mini lots, (10,000 units). Also the Broker is going to give you a Leverage on your account, this can be anywhere between 1:1 and 1:500 most seem to be around the 1:100 mark.
    This is why you will notice on your Demo account that you have a $50,000 account but you can buy or sell lots above this value. For example a $50,000 account with a 1:100 leverage will give you $5,000,000 max deal size. Note, you should not be using more than 10% to 15% of your $50,000 margin. The other 90% to 85% of the margin is your safety balance. When your margin balance gets to 0 (zero) the Broker will liquidate your trades and your money is GONE.

    Depending on the Broker you choose, they will have various levels of membership, these can be called various names like Micro, Standard, Silver, Gold, Platinum etc. and all involve diffrent amounts of investment.

    You can get as low as $25 to open an Forex Trading account but we are not going to go that low. FXCM start with an investment of $2000 for a Micro account, $10,000 for a Standard account and $50,000 to a premium account. Forex.com on the other hand, start at $10,000 and go up in $10,000 increments to a $50,000 account.

    As with most things in life, the more you invest the more you can get. For instance, you can expect better training options, better charting packages, closer spreads on currency pairs, lower commissions on trades, one to one training with a Market Strategist with the more money you invest.

    Do your research on your choosen Broker, use forums to see if their are unhappy clients, use search engines to find news articles on them or complaints or investigations on the trading habits. have they won any awards and if so what, by who and is it relevant to you.

    Other things to add to your list of question:

    How do I get my money out of the account when I want to withdraw some profit. (How long does it take? Fees?)

    Do you have a mobile/cell enabled website?

    Can I trade by phone?

    Is there an app for my iPhone?
    The Only Stupid Question Is One You Do Not Ask

  2. #2
    Administrator Jim's Avatar
    Join Date
    Apr 2010
    Location
    South West England
    Posts
    494
    There is a post on the blog about how to do your "due dilgence" before opening a live account with a UK based broker:

    http://trading-gurus.com/due-diligen...ity-of-london/

    Let us know if you'd like to see something similar for other jurisdictions!
    Reality is merely an illusion, albeit a very persistent one - Albert Einstein

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