Finance

Questions to Ask your Forex Brokers without Fail

Are you looking for a broker to guide you through the highs and lows of the complex Forex market? There is at once a number of factors that should ideally govern your search in this regard. Some of these factors can be quantified. For instance, you might be able to gauge its potency by considering its financial strength and number of regulators.

However, there are other factors that are not quantifiable. For instance, you might as well want to find out if there is somebody else other than the firm getting paid for your trading activity or not. There are a few firms that end up inflating the costs to cover up the payments of middlemen. As an informed trader you should – as such – always ask if there are third parties gaining from your trading activity or not.

There is actually nothing wrong in paying to introduce brokers or third parties. However, you should always know what they are being paid. Don’t be fooled into believing that these agents are not being paid at all – even if your broker wants you to believe that. Here is a rundown of the questions that you must ask a forex broker before getting the same on board.

Are you regulated?

One of the most effective ways to assess the credentials of the broker is to find out whether or not the broker is regulated. There is no dearth of regulated brokers out there. However, it is important to ensure that you are only getting in touch with a company which is offering you details of the exact regulators. In the U.S – U.S. Commodity Futures Trading Commission and the National Futures Association exercise jurisdiction over the forex brokers.

What should I know about your advertised spreads?

Only when you are getting to see the published spreads can you actually confirm your broker’s prices. There are a few brokers who publish the lowest possible spreads without really disclosing for how long these rates are actually on offer. For instance, whenever, you are coming across spreads advertised as “as low as” you should also find out what exactly “as low as” means. It is important to find out whether special conditions apply or not. It is equally important to find out from the track record of recent spreads if the advertised spreads apply to you or not. You should definitely see the spreads of all the currency pairs that your broker offers. Don’t really limit yourself only to popular currency pairs. You ideally should not have to pay more in order to trade the less popular currency pairs.

What should I know about the costs?

Last but not the least, do remember that spreads are not really the only factor governing broker costs. There is a string of other factors involved as well. Here is a look:

  • Commissions
  • Markups
  • Additional Fees

Please make sure that you are asking these questions to the brokers without fail. They will help you make you make informed decisions regarding the choice of the broker.

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