Alex Johnson Blog | 4 Tips to Choosing the Right Forex and CFD Broker | Talkmarkets
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4 Tips to Choosing the Right Forex and CFD Broker

Date: Wednesday, December 18, 2019 7:47 AM EDT

cfd and forex broker

Having read enough information on Forex and CFD trading, it is now time to put your knowledge to the test and apply what you've learned. The first thing you'll want to do is open a forex account or if you want to trade CFDs then CFD account. To do this, select a broker to place your trade orders with. Selecting the right broker however is no easy task. There are several considerations that need to be made when selecting the right broker for your Forex trades, such as dealing with high spreads, sufficient capitalization, and 24/7 service. There are other considerations as well, but let's focus on the 3 tips that can help you select the right Forex broker for you.

Shop Around to Get the Lowest Spreads

Some brokers prey on new traders because they have no clue and are unaware of the fact that they can negotiate to get the special price they want. The spread, which is the difference between the ask and the sell price, is where most forex and CFD brokers make their money. It's possible that some providers may be more flexible on pricing when you want to open your account, depending on the amount of money you decide to open the account with. You can always ask about alternative pricing, and just go somewhere else if you do not like what is being offered to you. If the spread is acceptable, then you will need to obtain information on the broker and his/her capital outside of the client base.

Check your Broker's Capital Requirements

Forex and CFD Brokers are required to hold their CLIENT's capital in reserve (or the deposit funds have to be segregated). Every trader needs to be aware of this, in the extreme case that a brokerage firm shuts down. So should this ever happen, know that they will have a portion of your capital in reserve, and will owe it to their client (you). There is even a way to file complaints in cases of fraud or client abuse. A broker has an obligation to its clients but will not inform you of every single one, so only educating yourself to those obligations makes you a better client.

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