Practical Questions to Ask When Choosing a Suitable Forex Broker Part 3

Brokerage Platform Functions

Because I am looking for an online trading platform, the functionalities I expect of the platform has to be lowered. You can be looking if a particular technical indicator is available or whether it allows trading from the charts directly. For me, I am only looking out if I am able to set pending orders for different profit targets levels for one single order with 2 lots or more. This will help me greatly when trading in the office!

Account Features

I suggest after deciding on the above, then let's look at account features that can help you to decide between two brokers if there were two brokers that fit the above criteria.

• ECN vs market maker (dealing desk) - basically, ECN brokers are touted to have better fills and have lesser chance of taking out our stops, because they are fully electronic.


• Spread - some brokers offer 2-pip spread for major currency pairs (even without commission!) when others offer 3 pips. ECN brokers tend to have smaller spreads. Some even offer 1/2-pip spread! But they usually charge transaction fee.


• Leverage - 1:50 or 1:100 is recommended for beginner traders. So if the broker can provide such leverage, all the better.


• Account Type (micro/mini/standard) - Beginner traders are usually advised to start on a mini account, to hon our skills.


• Minimum capital - Some brokers allow us to open an account with as little as US$400. We would not want to start with that little amount to avoid hitting margin call. We got to stick to our money management rules. What I am talking about here is that some brokers (seldom) require US$10,000 to open a mini account. Well, that's a little too much for a mini account.

Freebies
Just when you thought you will not be tricked into opening an account with an online brokerage because of the freebies they give. Well, it is very competitive in their line of business and don't be surprised that they give away very irresistible freebies! Just recently, I opened an account with a broker simply because it offers very comprehensive education for its customers, the likes of a free 1-day seminar by Ray Barros! Of course I made sure that there is no or minimal minimum activity fee, account closure fee, fee from transferring money out etc.

Brokerage selection - an art or science?