How To Choose The Right Forex Broker For Yourself

What we're going to write to you about today is choosing the right broker for your trading. This is something that the vast majority of people tend to underestimate for some reason - most people want to learn all the tricks or get the best strategy, however, wrong choice of the broker can easily turn a winning strategy into a losing one. The tricky part is that you won't be able to tell from trading on the broker's demo account. So what types of brokers are there, what can cost you money if you choose a wrong one and how to choose the right one?

There are basically two types of brokers - market makers and STP's (Straight Through Processing) / ECN's (Electronic Communications Network). In this case, it is not necessary to distuingish betwee
STP's and ECN's.

Typically, a market maker has fixed spreads and no commissions, which can look as a huge advantage at the first sight, but the problem is that a market maker - unlike an STP/ECN broker - actually trades against you, so it is in their best interest that you LOSE.

STP/ECN brokers, on the other hand, use a much more transparent model - they, simply said, pair your order with another client's or pass your order to one of their liquidity providers (usually a bank) and they take a commission for doing so. They take this commission regardless of whether you win or lose.

More often than you would expect, some market makers try and increase their profits by shady practices, like price manipulation, cancelling your winning orders for weird reasons, disconnecting the servers deliberately or even not paying out your profits.

What we recommend you to do is be aware that ANY broker is in the business to make money and they need to do it somehow - if they don't take commission, please realize that it doesn't mean that the trading is free.

Now if your trading style is scalping, you should not even consider trading with a market maker, as it will almost ALWAYS cost you more, even with reputable ones. If you go for bigger profits than a few pips, you can either choose ECN/STP as well, or go for some REPUTABLE broker (make sure to check out lots of reviews to avoid unpleasant surprises).

So make a wise choice and if you didn't in the past, trust us - it costs you less to switch a broker than to continue paying too much for your trading! Looking forward to meeting you at http://www.forexmeetingpoint.com to further discuss Forex trading!