Forex brokers are the necessary link to forex market, so once you decide to become a trader, you are doomed to long process of selecting the broker that not only suits you best, but doesn't scam its' traders. Almost every day, a new forex broker is being born online. With the abundant variety of features and services promised, the trick is to find a broker that you can actually trust. All of them claim to be the best, and making the right decision is not an easy task. When choosing a broker, which characteristics you should look for and compare? What are ways to build a reliable relationship with a broker? How can you ensure the security much needed in forex trading?
Each forex broker offers spreads (the so-called difference between the selling and the buying prices of a selected currency pair). The basic rule is - the lower the spread is, the better. However, for brokers the situation is reversed; since they get their commissions from spread, a higher spread is definitely better for any broker.
So, where is the comfort line where broker doesn't feel underpaid and a trader doesn't feel cheated? Generally, an excepted spread among traders doesn't go over 5 pips. Anything that goes beyond that is suspicious and should be avoided.
On top of that, fixed spreads is your best option. The last thing a trader wants to see is a change in pip spread when you least expect it. So, bear in mind that some forex brokers have variable spreads, meaning that during busy market hours the spread goes so wide, that the only time you could actually profit is when the market goes bullish.
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