Once you are committed to trading, the next step is to choose from the many hundreds of foreign exchange brokers that want your business. As with all major financial decisions—deciding on a broker is a fairly big decision—this is something to which you should apply plenty of consideration and time.
Why it Matters
While there may be many hundreds, or even thousands of foreign exchange brokers, not all will meet your requirements. Some may, for example, have limited software applications, but showcase the most impressively low spreads ever seen.
Others might have low spreads but higher fees for depositing or withdrawing money from your account. Some forex brokers may be operated overseas out of a person’s house and without proper credientials whereas some are certified and regulated by agencies which ensure legitimacy and legality.
There is an on-going conversation about how all foreign exchange brokers are scammers. This simply isn’t true.
The internet is one of the few utilities that all people, all across the world, can use. Some of these people may have bad intentions, but most do not. Think about it: when you buy something online, you probably purchase from a trusted source like Amazon. You know you’re not going to get scammed there.
Or if you go to the online auction site eBay, you might buy only from PowerSellers who have feedback from trusted sources, and a reputation that isn’t worth conning you out of $10. Are there scammers on eBay? Sure. But do they make up the majority? Absolutely not.
We’re going to show you how you can decide which broker to use, and also point you toward brokers that are regulated by agencies in the United States, England, and around the world. First, we want to talk about the types of brokers and trade routing services.