Let s face it: Very few of us actually succeed in teaching ourselves how to do something we ve never done before. If we wanted to play the guitar, we probably found a good guitar instructor. If we wanted to take up skiing, we probably availed ourselves of a good ski instructor. And if we want to trade in foreign currencies, odds are we re going to start looking around for a Forex broker who knows what he or she is doing.
What should we look for when we choose such a broker? There are at least eight different criteria to look for, and they include (1) trust, (2) experience, (3) favorable reviews from past clients, (4) a favorable track record, (5) the amount of advice they give, (6) convenience, (7) the amount of margin they offer, and (8) speed.
While all the abovementioned criteria are extremely important, perhaps the two most important ones are trust and experience. Obviously, you want to trust the broker you choose, and it stands to reason that the more experience they have, the greater your trust level would tend to be. This is not to say that you can t get good service from a new broker; in fact, some of them are very trustworthy. The fact remains, however, that most people feel more comfortable retaining an experienced broker, which is why many new brokers find a firm to which they can attach themselves and gain a mentor and additional experience.
Evidence of the success of a broker can be found in references from satisfied clients. The more you can speak with past clients who can attest to his or her performance, the more confident you can be that the broker will give you the same degree of service other customers have enjoyed. And while you are ultimately the captain of your own financial ship, you ll have more confidence in a broker who is willing to give you as much information and advice as possible. After all, knowledge is power. Furthermore, whether your broker is conveniently located may be yet another factor in your decision to retain him. If you live in New York or California, you will probably not want to retain a broker who resides in Ohio, though the age of the Internet has certainly made this consideration of less import than it used to be. After all, you can communicate with your broker no matter where you are by email or fax.
The amount of margin a broker is willing to offer you cannot be overstated as a consideration. Margin is a means to leverage your money, so a broker who will give you a 50 to 1 margin is more valuable than one who is only willing to offer you a 20 to 1 margin. Also, speed is another great concern. Does your broker return your phone calls and emails in a timely fashion? Also, is their speed of trade execution fast enough for the way you trade?If not, you may want to choose someone else.
Since your broker is someone you can trust and work with for a very long time, make the effort to choose wisely when you pick your broker. Ask for references from friends or family members who may have traded in Forex. It is perhaps quite possible to get a reference to a broker that you know you can trust.
If you don t have family or friends who have ever used a broker to trade in Forex, you can go online and do some research. Message forums, chat rooms and email groups through Yahoo, Google and other portals have tons of information that you can freely utilize for finding a broker. Just go online and start asking people how they found their broker. One of the best indicators as to whether you ll be happy with your broker is finding several clients in an online community who can attest to the success they have found by retaining this or that particular broker.
While you should take advantage of all the resources the Internet has to offer, including the number of people who are now online, you should not forget to ask your own questions online to learn what experiences people have had with this or that particular broker. You can also read trade journals and ezines to further supplement your education. In other words, read as much about the Forex industry as you can before you jump into the pool. This will make you a smarter shopper, and also a better trader.
Remember that finding a Forex broker is a process. You might even say that it s really its own job. Why? Because when you search for a Forex broker, you re conducting an employment interview so that you can determine whether this is the broker you want to retain to oversee your financial matters. Ask questions, ask for references, and otherwise don t be shy. Check with other people in the office to determine whether you would trust them to oversee your accounts in the event that your broker were incapacitated. Moreover, see if your potential broker will offer you the opportunity to take advantage of a demo account so that you can practice investing before embarking on the real thing. If the broker treats you fairly and seems to want to educate you, odds are he s more focused on the customer than on filling his treasury, so you know you ve done well if the situation feels right. Ultimately, though, a good broker will be able to unwaveringly answer your questions and help you make it through the learning curve.
