In the past, only large international financial institutions were allowed to trade currencies, but with the introduction of online forex brokers, i.e. forex trading platforms, individuals are also given an opportunity to invest and increase their capital by trading currencies. Basically, a forex broker is a company which provides a platform for individuals who like to engage in speculative trading of currencies. This type of forex trading where individuals get to trade via a platform is also known as ‘retail forex trading’, a term used to distinguish it from the more traditional type of forex trading.
Your first priority is to carry out research with the aim of discovering whether a broker possesses an exceptional reputation and whether they are able to meet your needs. The vast majority of the main forex brokers will permit prospective clients to test their services with a practice or demo account, so that they can obtain a good understanding of what the system is actually like. It would be wise of you to test out as many platforms as you can prior to deciding on which broker to use.
Most brokers charge a fee for their services through the bid-ask spread, which is a small difference between amounts at which a currency can be bought and at which it can be sold. The bid-ask spread at brokers will vary in size depending on market conditions. However, traders may want to seek out brokers whose spreads are generally narrower on average in order to lower the cumulative costs of trading over a series of trades. Also, some brokers may charge commissions for trading. The commissions may be calculated on a fixed basis per trade, or may be charged according to volume traded.
Questions you should ask when choosing your broker: what currency pairs are you going to trade, what spreads would suit you (fixed, variable, how many pips), do you accept paying a commission for trading forex, what would be your minimum investment (account size), what leverage do you need, what tools, indicators do you need for trading, do you need a specific trading platform, do you want to scalp, do you want to hedge, do you need "one-click-trading" execution feature, do you wish to have mobile phone trading feature and/or trading alerts, do you care whether it is going to be a ECN/ STP or a Dealing Desk broker. There could be restrictions depending on the country you live in. How much would it cost you in fees to pay for funding, transferring, withdrawing your money.
The forex market is the largest market in the world, and individuals are becoming increasingly interested in it. But before you begin trading it, be sure your broker meets certain criteria, and take the time to find a trading strategy that works for you. The process of selecting a forex broker is one of the most crucial decisions you will ever make, at least throughout your forex career. This decision, just like the trading itself, must be made in an objective and scientific way. What I mean is that you should not let yourself get tricked by the various promises being made by the broker, set yourself clear cut guidelines as to what you are looking for in your broker, then find the one that matches your needs.