FACTORS IN CHOOSING A FIRM

While strategies and tactics are important, ultimately, the trades are placed at a forex
firm. The industry is growing rapidly, and forex firms are available throughout the world.
Selecting the right broker can make a difference. While there are essential features at
most firms, the most important criteria for selection for a trader include the pip spread,
dealing desk, customer service, and trading resources.
Pip spreads are rapidly becoming much narrower. Just a few years ago, five-pip
spreads were the standard. Today two-pip spreads are available. Remember, if the spread
is two pips, then the forex firm is still making money. They are offering you the currency
pair with a built-in profit.
The industry is also evolving its dealing desk structure. Firms that have automatic
dealing desks are becoming more common, allowing better spreads. But there is no free lunch. Remember, the firms make money on your trades. Customer service is critical.
When the net freezes or you have a question about a trade, the ability to call someone on
a 24-hour basis is important. Equally important is the ability to communicate. Some firms
offer 24-hour service, but the trader connects to a barely competent English speaker.
Tech support could be in a third world country. But trading resources is a major tipping
point in choosing a firm. Most trading platforms have basic charting. The trader has to go
to third-party providers to obtain charts such as three-line break and renko. Firms offering
advanced charting packages and discounts on their cost is one criterion for choosing,
particularly when accounts are traded with larger capital. Essentially, a good trader can
trade profitably at any firm, but an average trader can improve his trading when choosing
a better firm in terms of the total services he receives.
The trading environment used by the trader is more important than is usually recognized.
Getting started the right way requires having a trading environment that serves
the needs of the trade. Having two screens is a minimum suggested configuration. One
screen should provide access to charts, and the second screen should enable access
to Internet-based information and other activity. Having more than two is not unusual
among more serious traders. The forex trader beginning today can use any new computer
due to the advances in computer speed and capability. The most important aspect
of organizing your own trading room is whether it is dedicated to the trader. The trading
room should be isolated from family interference. Trading with kids running around is
too distractive. Today’s Internet connections provide easy access via high-speed links
(DSL, digital cable, etc.). Trading through a dial-up should be avoided, but it can be used
as a backup.




By Abe Cofnas