If you are looking to enter the forex trading market, and have little or no experience with it in your past, your best bet would be to review and identify an experienced and reputable brokerage firm. Nowadays, there is a vast array of brokerage consultants available for hire, but choosing the right one may not be as simple as you imagine.
There wouldn’t be any need to switch brokers if you get features you need from a broker from your present broker carrier. Switching Forex brokers is something that all traders do sooner or later. The reasons can be numerous, and varied to say the least. Perhaps you have gotten a bad deal at your present broker. It is also just as likely you are looking to trade a currency pair that your broker doesn’t offer. Maybe it is leverage. There are actually quite a number of valid reasons to switch Forex brokers.
Sometimes it takes time to find that broker you are satisfied with – tighter spreads, low commission on variable spreads, easier deposit and withdrawal process, nicer trading platform and more. Some people do switch brokers a lot, basically for the fact that they are not getting what they want from their brokers or for some other reasons. But on the other hand, constantly switching brokers is a waste of time because no broker can really satisfy us 100%!
The first thing that many potential investors do when Choosing a Forex Broker, is to consult online surveys, reviews, rating and research. There is a lot of information available on the web that will allow you to make a more informed decision. The second thing that you might want to do is consult with friends and family who are already invested in the forex trading market, with the help of a broker. Understanding their own experiences with a brokerage firm, will help you identify what it is you want to look out for.
The advantage that potential investors have in today’s market is that they can trade with increasing low volumes. While it is certainly true that high volume investors have the potential to sway the market in their favor, far greater than low volume ones, sometimes your investment budget may restrict you from investing big. While in the past, using a brokerage firm would require you invest minimum deposits in excess of thousands of dollars, it is now possible to invest as little as $100. As such, you are in a leveraged position when choosing a broker. You can experiment with different brokers with small sums of money to determine which one is up to your satisfaction.
About Broker to Broker Transfer: Should traders wish to change brokers or simply move some funds from one broker to another without withdrawing and re-depositing, it is possible. A broker to broker transfer is quite often supported by many brokers, even if it isn’t advertised. Usually fully validated accounts will be required in both brokers and there will normally be a fee. If you are considering do a broker to broker transfer it’s important to consider any fees and the fact that you will effectively be telling your brokers who else you trade with.
You’re likely to be charged a fee
When you move money from one brokerage firm to another, the broker you’re leaving is probably going to hit you with a fee. I was charged $75 for an outbound full account transfer from TD Ameritrade, and $50 by Fidelity.
Such fees vary from broker to broker, so find out what you’ll have to pay when you move your money out. I was told those fees could not be waived, so there’s likely no way around the process of paying to extract your assets.
You will be unable to trade for days
The process of transferring securities takes time — in my case, around nine days. The investments first disappear from your account where they’re currently held. Several days later, they reappear in your new account — and it takes another day or two after that for the history to be imported so you can see the share prices at which you bought the stocks.
If you tend to trade actively, be sure not to initiate the account transfer process until you’re ready to give up access to your investments for over a week, since you won’t be able to buy or sell while it’s under way.
And, when you do make the switch to your new broker, have a printout showing the details of the stocks you own if you want to monitor the investments in the interim — unless you can remember them all — since you’ll lose the ability to see them in your old account days before they show up in your new one.
You might get free money and bonuses
Going through the process of switching was a big hassle, but there was a reason I did it: My new broker was offering generous incentives.
I was able to get several hundred dollars in rewards for transferring multiple accounts, with the rewards level based on the account balances. I was also able to get up to 100 free trades per month, and I became eligible for a boost in credit card rewards with a linked card that offers premium rewards for maintaining a certain investment account balance.
Most brokerage firms offer some kind of reward for transferring your business to them, especially if you have a reasonable amount of money to move over. If you’re thinking of switching brokers, comparison shop to find one that’s offering rewards that work for your situation, so you can get some free money to make up for the hassle.
“Broker to Broker” transfer needs permission
“Broker-To-Broker” transfer literally means the direct money transfer from a broker to another.
Instead of withdrawing funds to your bank account and making a deposit again to another, you can complete the whole process with just one transfer by filling up the form.
Although, B-to-B transfer is not preferable for the broker losing a client for another broker, and it is just a waste of time for the broker to process transfer for another broker to get the client.
Thus not so many brokers accept B-to-B transfer in case they are not receiving the fund but losing the fund for another broker.
So the first thing you need to do, is to ask your current broker if they allow its traders to transfer funds to another one directly.
Factors to keep in mind when Choosing a Broker
Trading Options, Features, Tools, Platform
Perhaps the most important factor when entering the forex market that you will want to keep in mind is the amount of money you are investing and the volume of trades. If you are only looking to invest a small amount of money, your broker options will immediately be narrowed down to only a handful. Whereas previously, brokers required high initial investments into the market, they have now relaxed their limits significantly.
Another factor involved in trading, is the number of currency pairs that each brokerage firm will offer. Some of the best brokerage firms offer anywhere between 30 and 60 currency pairs for you to choose from and trade within. As such, if you are interested in trading with a rare currency pair not offered by most brokers, your choices will automatically become limited.
The trading lot size will also play a huge role in your choice of broker. While initial investment may be an important factor, some brokers will require you to trade in minimum lot sizes of 1000. This is the common minimum among most brokers. However, some brokerage firms may require you to trade in far larger lot sizes in excess of 10,000.
Finally, leverage will also become important. Leverage is the amount of money that a brokerage firm will allow you to borrow from it. Leverage is important because it will allow you to increase your gains significantly even with minimal investment. However, leverage is a double-edged sword because if you are unsuccessful in your trades, you will increase the rate at which you owe the broker. Brokers can offer leverage ratios anywhere between 50:1 and 400:1. Ultimately, the decision to take on increased risk will fall entirely on you.
Type Of Forex Broker Execution
In the forex market, there are predominantly two kinds of brokers. These are market maker brokers or an Electronics Communications Network broker. The way in which they differ is based on their fee schemes. Market maker brokers will base their fee on a percentage of the value spread. This means that their fee will be entirely dependent on the difference between the selling and buying price. Since this spread is variable, it must be noted that such brokers have it in their best interests to manipulate the spread sometimes. Electronic Communications Network brokers, on the other hand, charge a fixed fee per transaction. As such, they are not incentivized to manipulate the spread.
While it may seem like a no-brainer to go with ECN brokers, it is important that you study the payment and funding options closely as well. Some brokers may charge fees for withdrawing money from your account. As such, if you are not in a liquid position, it is not recommended that you trade with cash that you require for the short-term. It is also important to study the interest rates that different brokers offer if you are planning to trade overnight. Some brokers may also charge other kinds of fees associated with wire-transfer, routing, and margin rates.
