Forex Brokers: Getting Started
Before you start trading any instrument, be that forex, indices or commodities you need to find a reliable broker as we retail traders can only access the markets via a retail brokerage, and as such this is “must have” relationship that needs to be chosen wisely.
So what exactly is a retail broker? Put simply, a retail broker is a company that provides retail traders (that’s those of us who trade our own accounts with our own money) with access to a trading platform through which we can buy and sell various instruments (like forex, indices etc) in the markets. They hold an intermediary position between us and the market and in effect buy at one price and sell on to us at a higher price, much like insurance companies, who also act as intermediaries.
A retail forex brokerage handles a very small portion of the overall volume of the foreign exchange market (which is estimated at over 5 trillion US Dollars a day!) and earn their commissions through the ‘bid-ask spread’ of an instrument, simply connecting your buy order with another seller and taking a cut in the middle.
So how do I find a reliable, trustworthy broker ? Well, you could take a moment to Google “Forex Broker”… I just did, and I got 9.92 million hits back – that’s a lot of pages to read ! Having been a retail trader for almost 10 years I know just how frustrating it is wading through website after website looking for that “something” that sparked my interest; and having been a client of Alpari UK (a retail brokerage that went bang in spectacular style following the SNB debacle back in January 2015, taking my money with them) I know to my cost the consequences of making what looked like the right but which turned out to be the wrong choice.
What follows will give you some solid pointers as to where to start, what to look for, and how to protect yourself should things go, shall we say, less than well…