With so many forex brokers on the market today one would wonder where to begin and what really to look for before making the big decision of signing up and forking over your hard earned cash. Maybe its not that big of a deal to you but it really should be and let me explain why.
Even today with our technology, apps, smart phones and ipads- some forex brokers still operate as a dealing desk and take the opposing side of every trade, actually betting against your position hoping to take your cash. Basically, it looks like this: you decide to go Long, Buying the market and your Broker is short now in the market, Selling the market and hoping that he's right and your wrong. Where it gets more interesting is these guys have the power to move billions of dollars of inventory say in the Dollar or Euro and essentially become a market maker becoming a significant influence in the markets direction just because they have more dollars than you and are taking much bigger positions.
Its much smarter to look for a broker like FXCM.com that is a no dealing desk and essentially is only making the majority of there money off the spreads. (the money that's the difference between the buy and sell of any currency pair). Now granted this is the majority of the truth but in all reality even FXCM is trading the market but are hedging their positions over the long term instead of the little forex broker that is physically looking at where your Stops and Limits are and are pushing the market with Central Banks and others on a Stop Hunt to take you out of the market and grab your cash. That leads me to say it is much better for you as a trader to trade with a broker that is very large and has allot of liquidity that can offer lower spreads and doesn't have to go after you the retail forex trader for them to pay their bills. Also, if your successful as a trader there less likely of chance you get your account terminated and they ask you leave simply because your making money. The smaller brokers only want accounts their making money off and not the other way around.
Finally, its good to understand all brokers need you and that even you being a retail forex trader you have the power to cancel your account any time and get your account equity back. Even at times I've seen an error in their software or online browser plateform error that I recommended a audit and sure enough a good broker should be willing to fix any mistakes and refund your money for that trade or compensate you for a fix in the spreads if there is a legitimate error on there part. Always stand your ground with your broker and don't be afraid to call them and use there valuable customer support to fix your account, update your contact info or ask them even the most mundane of a question if your new to forex. Great support is indicative of a very good broker and a absolute must in my book! If you have additional questions leave a comment.
happy trading!
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