When choosing the best broker you need to know how it works. Know the pros and cons of different types of brokers.
Market Maker – MM broker most often does not direct orders to their clients on the Forex market. As the name suggests, “Market Maker” is a broker that creates its own Forex market. This type of broker loses when the client gains, leading to a conflict of interest. Hence, many MM brokers prohibit or impede the conclusion of certain transactions. Therefore, brokers of this type do not enjoy good reputation but of course there are exceptions. Problems with MM brokers can have players who roll over large amounts. For beginners and small players MM type broker has many advantages and is a good choice. Very often MM brokers offer large cash bonuses at start.
Electronic Communication Network – ECN Broker redirects customer orders directly to the open Forex market where private and state banking institutions, other brokers, companies, financial institutions, investment firms and individual investors participate. These types of brokers allow you to make all types of transactions and guarantee anonymous trading.
Advantages of ECN Straight Through Processing (STP) – These types of brokers direct all transactions straight to the so-called. They are usually investment banks, other brokers, investment funds and hedge funds. STP brokers allow you to enter the real foreign exchange market without much financial investment.
You already know the advantages and disadvantages of different types of brokers. That’s a lot. Finding a broker is a good starting point for analyzing your situation and your needs.
Answer the following questions:
1. What capital do you want to spend on the market? Put an amount of money on an investment you can lose. This is the best way to play forex. Forex is a demanding market. Never invest all your savings. Check if the broker is regulated by the European Financial Supervisory Authority. It is also important to separate the money deposited by customers from their own resources. In our ranking, which we mentioned, the safety criterion plays the greatest role. If you do not have a lot of money you have to check the minimum amount you can start speculating. minimal transaction. This is not a factor that needs special attention because all brokers have a virtually identical minimum transaction threshold for small players. With larger payments, brokers offer “VIP” or “Premium” accounts. They have many advantages, such as lower spread, individual handling, non-standard training packages.
2. How much time do I spend on Forex? How many days can you devote to market analysis and tracking? Trading is a very time consuming activity. Without discerning the market and the important information that will shape the odds, you limit your potential profit. If you have enough time to analyze the market – intraday speculation and scalping are for you. For this reason, look for a broker with a low spread and a small commission on the transaction. If you can not dedicate sufficient time to trading in the Forex market, long-term investment will be most appropriate.