Unlike stocks, Forex is a decentralized market and this means that different brokers may offer slightly differing rates for the same ...
Unlike stocks, Forex is a decentralized market and this
means that different brokers may offer slightly differing rates for the same
currency pair. Because of this, a lot of traders – especially beginners think
that their brokers are ripping them off. While the likelihood of being scammed
in the Forex market is higher than in stocks, there are a number of legitimate
Forex brokers out there which you can actually trade profitably from.
Now when you start looking for a Forex broker in Australia, you’ll find
numerous choices around the Internet that it can be confusing which ones are
legitimate. To avoid the unnecessary headaches as you choose for a Forex broker,
here are some things you should look for:
Is it Regulated?
Regulated Forex brokers are those that are registered with
an authority body which supervise the activities of member brokers and ensure
that they operate ethically and legally. Regulated brokers strictly adhere to a
set of guidelines in order to stay regulated. So dealing with this kind of
broker will give you the peace of mind, knowing that you’re not dealing with an
unscrupulous company.
You can find out if a Forex broker is regulated by visiting
their website. Most regulated brokers have official websites where they provide
details of their membership in a regional regulatory body. Alternatively, you
can go directly to the regulator’s website instead and find out if the Forex
broker you are looking at is included in their list.
Does It offer Direct market Access and Straight Through Processing?
Direct market access means instant execution of your trades.
This is important considering how volatile the Forex market is. A direct market
access removes the likelihood of costly rejections and re quotes which can
either make or break your profits.
Straight Through Processing (STP) brokers are what traders
refer to brokers that forward the orders of their clients directly to their
liquidity providers who have access to the Interbank Forex market. This is another way of saying that your
broker is not a market maker and just as important - doesn’t ever take the
opposite side of your trades.
Does it Offer Competitive Fixed Spreads?
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