Just as you know that there truly isn’t a “one size fits all” business approach, the same is true in Forex trading. There is no one best Forex broker – rather it’s about finding the one that best complements your own personal business style and instincts.
A good Forex brokerage firm can be an invaluable resource to an investor that has done his homework. Like all professionals, you’re looking for someone with experience, valuable insider knowledge, and the room to let your portfolio expand.
For instance, if you start a micro account, you’re going to want a broker who has the knowledge and insight to help you expand your portfolio. First, look for recommendations. Reliable online and offline recommendations can be a good indicator of a trustworthy broker.
But watch out for scams. While no one can entirely avoid scams, there are things you can do to minimize your risk of falling for a scam. Use a search engine to search for the brokerage firm name and the word scam or complaint. If you don’t feel comfortable with the results, consider another broker.
If you like the results you find then proceed with the next logical question. Does this broker claim to have a membership in the Futures Commission Merchant (FCM), Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA)? Many brokerage firms are often affiliated with sound financial institutions such as a local bank.
Next, you’ll need to know if the broker you’re considering is a member in good standing with these organizations. You can check that by using the Background Affiliation Status Information Center (BASIC).
BASIC allows you to search by firm name, individual name or by NFA ID number. Using BASIC will allow you to see a NFA member’s standing as well as any disciplinary action taken against him.
Once you’ve checked this, you need to consider if this brokerage firm is insured against fraud and bankruptcy. If the firm is not insured, the money you plan on using for your vacation to the Bahamas could quickly and quietly disappear.
Next, you’ll want to examine the customer service. Spend a few minutes on the phone with customer service. Observe how the customer representative answers your questions, their tone and level of professionalism.
Finally, start a demo account with two to three of the potential brokers. Learn to use their trading systems and note advantages and disadvantages. And before making that final decision, remember to read the fine print.