DISCOVER HOW TO SELECT THE BEST BROKER SERVICE FOR OPTIMAL TRADING PERFORMANCE - Part One

 Choosing the right broker is a major determinant of success or otherwise in forex trading career. The fact that there is no centralized exchange made it a custom for dealing firms also known as brokers to tailor their activities to certain areas of interest ranging from price feed, market making system, platform, capitalization order execution, and lot more. Based on this challenge, trading firms tries to fit to different trading styles.

Forex is a much unregulated industry with a very high income potential to brokers and as such it is very necessary to choose rightly. Even though it is almost impossible to distinguish solid clearing firms from low level bucket shops that will do everything possible to make you lose, caution had to be exercise when selecting a dealing firm to trade on.

Below is what to look out for when choosing a broker service:-

o   Players involved

o   Regulation and Capitalization

o   Dealing practices

The players involved in forex trading are Central banks, Multinational companies Commercial banks and Corporations who sit on billions of dollars who can afford to trade a huge volume and influence the price somehow. Individual trader or a small or mid-level money manager should not fight with the big players but work the system in order to increase success.

 You need to be comfortable with how secure your money is at a dealing firm. When it comes to regulation, stick to US based, NFA and CFTC registered firms. The NFA always makes sure that the firms have sufficient capitalization, proper trade reconciliation, ethical business solicitation, solid anti money laundering policy and much more. Visit the NFA website www.nfa.futures.org. All US firms should be registered as an FCM (Futures Commission Merchant).to check the registration status of a firm with the NFA Basic Service check http://www.nfa.futures.org/basicnet/. On the web page, put a firm’s NFA ID or name and receive their registration information, the name of the principles and prior registration of the principles. You can also see if there was any history of complaints against the firm. Consider the size of the firm, customer base, firm's capitalization and client base. A good place to find out how well a firm is capitalized is on the CFTC (Commodity Futures Trading Commission) www.cftc.gov. To look up a firm’s capitalization, go to this website http://www.cftc.gov/tm/tmfcm.htm. Look at the adjusted net capital, the capital requirement and the difference in the two. Obviously the more overcapitalized a firm is the better. Google the minimum capital requirement for a forex FCM today and do a comparison of the two. Go for larger firms with larger net capital, registered with the NFA and the CFTC especially if you are trading a bigger account.

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