Why can picking the First Broker you find could get you Broke?

“Decision without thinking is like a body without head”. For most Forex traders, picking a broker is a decision made without any care or thought when in reality it is possibly the most important decision you will make during your time as a trader!

 

So you’ve just discovered the exciting world of Forex trading and you can’t wait to inevitably make the millions you’ve always dreamed of. You sign up to the first broker you find and transfer the $500 minimum opening deposit. Your smile beams from ear to ear. Within a few days that $500 has dwindled to a meagre sum and you are left wondering where all of that money has gone. You followed all of the guides and tried a number of different methods but you simply cannot work out where it had all gone wrong. What if I told you that from the beginning you were doomed to fail? Like many people you were too eager to get started that you failed to consider the possibility that there are a number of different brokers who despite offering inherently the same service, all succeed in offering completely different ones at the same time.Some brokers will be geared more towards new traders, whereas others for experienced financial experts. If you’re a new trader and you choose a broker for professional traders, the likelihood is you’ll just be confused and end up losing all of your hard earned cash.

 

 

How can picking the First Broker you find get you Broke?

The most important factor that new and inexperienced traders must consider is that they are not trained financial experts and many of them seem to forget that. They have not spent years studying the market and its intricacies and must therefore be cautious when trading. Each website has a different minimum deposit, so if new to trading then picking a website with the lowest deposit or beginning with a demo account can be vital. It gives you a chance to get a feel for the trading platform and find out how to utilise each of its features to your advantage at the cost of only a small amount of time or money. Losing $50 is not too bad but losing $500 is terrible. Moreover, it gives you a chance to find out whether you enjoy trading, the original excitement may wane very quickly when confronted with the unending plethora of graphs. You must then also consider the supplementary options that each broker may or may not offer such as market commentary or news feeds. How vital do you consider these services? If the answer is very, then be sure to find a broker that offers any services that you believe are necessary. Leverage is very rarely understood and almost never even considered when it comes to traders yet it may hold the key to success or failure of a trading account. New traders can think of leverage as the maximum or minimum amount of money they can hold in their account at any one time. A leverage of 2:1 means that any trader can hold twice as much money in their account as their original deposit and can only have a balance as low as ½ of their original deposit. Most new traders should consider picking a low leverage meaning they cannot lose too much money if their investments were to take a nose dive. Spread and commission must also be taken into account by any traders as this determines how much of your sale price the broker is going to take from you. There are so many more options you should also consider such as whether the currency pair you’re interested in is currently being traded. All brokers will offer the popular pairs such as EUR/USD etc. but may not offer the pair that you are interested in. Being a new trader the trading platform must also be simple and easy to use. Trying a demo account will help you get to grips with the platform interface but lack of familiarity with it could lead to mistakes which could cost you money.

 

 

Conclusion - Do your Research and Choose Wisely

You don’t control price and you never will. One of the few things you control in Forex is who you give your money to. Knowing that, wouldn’t you say it is paramount to make a good choice when it comes to brokers? Do not make a decision without thinking if you don’t want to look like a headless chicken. I’d say: let’s attach a head to that body and let’s think before acting because you can get broke if you don’t base your decisions on the right factors. Resist the temptation to sign up to the first website you see as you will regret it in the long run, consider your needs and requirements and then pick a website to suit you.

• First, look at the options such as minimum initial deposit, leverage, spread and commission and the currency pairs they offer. If any one of these is not to your liking then exit the site and find another. Hopefully you will find a list of around 5 different brokers that all offer what you’re looking for
• Second, start a demo account. Each trading platform will have a different layout and different features, so pick one that is intuitive to use and that you could see yourself using in the future with plenty of features that you could use to your advantage.
• Third, really scrutinize each site to find any advantages or hidden costs that you may not have found the first time round. You’ll be amazed how much each of these brokers have to offer and how they’re all so different. If you can’t find some of the information that you require on their website, then contact them, they all have expansive support teams as they know how easily people can switch brokers.