Online Forex Companies

If there is one thing you should do before you choose a Forex company, it is research. This industry is growing exponentially every day, and there are many Forex companies popping up all over the US (and offshore as well). How do you know which companies are right for you?

Are They Regulated and Registered?

The first thing to know is if they are regulated in the country in which they reside. Along with this, they should be registered with the appropriate governmental agency. Remember - even registration does not guarantee honesty.

Which Currencies Do They Offer?

Some companies start with a minimum of currency pairs. Although this is not a big deal at the start, as you gravitate to currency pairs that you like, you may find it better to have a wider variety. We are not suggesting the exotics, only that it is more beneficial if you can trade EUR/JPY without "legging" into it.

Customer Service

There are many, many companies out there who offer a trading platform, basic charts, and prices and ask for your deposit. By law, they must assist you with complaints, but how friendly are they? Do they really have your best interests in mind? If you don't understand something, will they take the time to explain it? If you call in to trade, will they help you walk through the trade so that you understand it and are confident that you have done the trade that you set out to do?

Trading Platform and Charts

Many platforms that are offered are fine for our purposes, but you should ask yourself these questions: Is it user-friendly? Can you easily understand how it works? Is it stable? Many companies offer a Java-based trading platform. Most of the time, a Java-based platform is fine, however, there is a problem inherent with some Java systems that may cause problems. That problem is that if the market becomes active and many customers (just like you) are trying to trade on the platform, it may (and often does) fail. Some Java-based platforms are definitely not the optimal type to use when trading in busy markets - check with your prospective online company to see if they carry the latest Java technology.

In other sections, we mention that there are many services available for a price, including charts. Many companies give basic charts for free - some are good, many are not so good. It sometimes (not always) pays to lease charts that are data-reliable, user-friendly, stable, and accurate.

Education

How interested is your Forex company in making sure that you have everything at your disposal to help you get a fair chance? It may surprise you, but most Forex companies today have one thing in mind: to capture your money. You must find a company that wants to win with you; not against you. A sign of a good company is one that wants to educate you in what you are partaking, so that you will grow with them. There are millions of customers out there who will sign up with a company without really knowing what they are doing, lose their highly leveraged deposit, and walk away wounded. Who does that help? It doesn't help the good Forex companies build a retail market in Forex when two out of every three customers blow up in a month or less. In the long run, smart companies know that customers will seek out the companies that help them to build their portfolios, not destroy them. Make sure that the company you sign up with has your interests in mind.

Spreads and Fees

There is a whole array of spreads and fees that Forex firms can charge. You can usually find one that doesn't charge any fees and whose spreads are not unbearably wide. Some may give you very tight spreads, but charge a fee; others will give you a slightly wider spread and let you trade for "free." Everyone knows that companies are not in it to break even, so you should be aware that they are probably dealing for free on a tighter spread than they give to their customers. This is not illegal and is, in fact, pretty logical. They can get a better price than retail - just like most department stores. What you do have to look for is a company that will treat you well. That means they don't take extra pips on your stop loss orders, and they give you fair fills on all orders (both take profit and stop loss orders). Basically, most companies will execute your stop loss before it is traded in order to fill your order at its price. Other companies will wait until your order rate has dealt, but then fill you at the next best rate (which may be significantly different than your order rate). Both ways are generally accepted, just be sure you know what your preferences are, and what the companies have to offer. Take profit orders are usually filled when the price feed has exceeded your order level. For example, if you leave a bid at 110.50 in USD/JPY, it will only be filled when the market is offered at 110.50. Remember that stop loss orders do not guarantee a good rate fill.

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