A Forex broker is a person or company that will carry out Forex trades on your behalf. They are an essential part of your Forex strategy. They charge for this service, but not in the normal way. Whereas stockbrokers will usually charge you a commission, a Forex broker makes his money by the difference in the bid and ask price. Ideally you should be looking for a broker that charges a 2-3 pip spread. Anything over 5 pips is expensive and should be avoided.
The reputation of a company is a good indicator of what level of service you may expect from them. This information is sometimes quite difficult to obtain because many of the online Forex brokers are quite young companies. However you can visit the search engines and online discussion forums to see what other people's experience is with different brokers. The types of things to look out for are comments about how the company reacted to problems. Did they take ages to answer queries or were the customer support team able to deal with them quickly? Another common area of complaint is the ease of use of the platform. Are people finding that they can quickly execute their trades? This little bit of research shouldn't take you too long but it could save a lot of problems in the future.
One of the important practical things that will help you choose a broker is the trading platform that they provide. This is the software from which you make your trades. You should be looking for a platform that is user-friendly and easy to use. You may want to try out several on demo accounts so that you can get a feel for them. Most brokers will offer you an option to have a downloadable application or one that is web-based. The web-based option has the advantage that you can access it from any computer, whereas the downloaded version is often quicker.
Another important factor when selecting a Forex foreign exchange broker is whether they are regulated. You should check to see whether they are registered with Commodity Futures Trading Commission (CFTC). This should be the case for all US based Forex brokers. They should also be members of the National Futures Association (NFA).
