A broker is someone (or a company) who works on your behalf to handle any type of financial exchanged. A Forex broker is someone (or a company) who helps people wanting to trade in Forex. He brokers (or acts as the go between) the deal. He trades in the currency market for the trader, acting on the trader’s instructions.
Many beginning traders assume they can just hand over money and the broker will make all the decisions, leaving them out of the picture except when it’s time to collect their profit.
They assume finding a Forex broker will eliminate them having to make choices and therefore eliminate their risk of making a mistake. A broker can make suggestions, but the ultimate move is in the trader’s hands. You have to tell your money where to go in order for it to work for you.
With untold numbers of Forex brokers available, how do you choose which Forex broker you should work with? Choosing a Forex broker shouldn’t be done the same way you choose a plumber out of the phone book.
You want to make a wise choice since you’re basically trusting your financial investment into the Forex broker’s hands. If he’s not capable of handling Forex wisely, or worse, if he’s capable but not on the up and up, you stand to lose everything you invest. You want a Forex broker with experience, one who will help you make the best possible moves in the currency market.
Make a list of Forex brokers. Check each one to see where he or she stands with the Commodity Futures Trading Commission (CFTC). Find out how the Forex broker makes his or money from you. Does the Forex broker charge you commission? Or does the Forex broker charge you fees instead?
Check with your friends who use the services of a Forex broker. Who do they recommend you work with? Is there a Forex broker they know of that you should avoid? Even though you trust your friends to have your best interest at heart, you don’t know if the Forex broker has a solid track record.
Check out what the Forex broker has done in the past. What are his profit/loss records like? Speak with him on the phone; spend a little time getting to know him. If the Forex broker doesn’t have time to spend talking to you to give you personalized service, then he doesn’t have time for your money.