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  1. #1
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    15 Questions to Ask Your Broker

    Does your Forex Broker cut the mustard?
    The 15 Questions you should ask your Broker.

    There are many Forex Brokers, but not all were created equal. When it comes to your money, you want to be certain that your Broker meets your expectations. It is your right to ask as many questions as you need to feel comfortable about your venture and if you donít get the answers your want, you should consider finding another Broker.
    Why Size Does Matter

    Size matters. Because the Forex market is an over-the-counter market with no centralized exchange, not everyone receives access to the same prices or quality of execution. Institutions with the largest trade volume and the most solid financials have access to better prices and execution. The bigger the broker, the better they are able to pass on the benefits of size, better prices, and better execution to you.
    Who Executes Your Orders?

    Not all Forex Brokers quote rates the same way. Below are two possible options:

    • Dealing Desk means that your Forex Broker creates the pricing and executes your orders. The spread is usually fixed, which means that traditionally, the spreads are higher than average variable spreads. Check for restrictions on placing orders during news or economic events; for many traders, this is a key time to trade.
    • No Dealing Desk usually means that multiple banks stream competing prices through your Forex Broker, so your orders are executed by the banks themselves. This means that there are usually no restrictions on trading news or economic events, but you should check with your broker.

    Spreads

    Fractional Pip Pricing
    Most major currency pairs are quoted to four decimal places, so a pip would typically equal .0001 or one basis point. Forex Brokers generally round the price up or down to the nearest pip; but some now offer Fractional Pip-Pricing. It ads an additional decimal place, so spreads are usually tighter and more accurate.
    Scalping the Market Many traders favor short-term scalping strategies, which involves placing orders inside the spread. For scalping to be profitable for the client, the market maker must lose, so some Forex Brokers disallow the strategy. This strategy involves a high level of risk.
    Rollover

    Rollover is interest earned or paid on Forex positions held overnight. It varies depending on the difference in interest rates between a currency pair and fluctuates day to day with the movement of prices. A Negative Roll is when you sell a currency that pays higher interest rate, so you pay interest. A Positive Roll is when you buy a currency that pays higher interest rate, so you can earn interest. Negative Rolls are routine, but not all Forex Brokers offer positive rolls.
    The "Carry Trade" is a popular Forex strategy which benefits from Positive Rolls and the high leverage available in the Forex market. For example, if you buy the USD/JPY, you can earn a positive roll. You are essentially borrowing the Japanese yen at a low interest rate cost to buy the US dollar with a high interest rate earning. Remember that leverage can dramatically amplify your losses, so beware of this technique, as it carries a high level of risk.
    Hedging

    Hedging lets you simultaneously hold BUY and SELL positions in the same currency pair. The most effective way to trade a market if you are uncertain about its direction is to find concrete support and resistance levels. This allows you to pinpoint levels where significant price action will take place.
    Hedged positions do not necessarily limit risk as traders can find themselves losing on both sides of the trade. While this strategy tends to work temporarily in range markets, it does not work well in trending markets. Placing stop-loss orders on your positions to mitigate your risk is strongly recommended.
    The National Futures Association, a self-regulatory organization in the US, adopted a new Compliance Rule 2-43 in 2009 that prohibits customers of Forex Dealer Members to open a "hedged" position in the same account. This rule may not apply to Forex Dealers outside of the US.
    Customer Support

    Forex trading works 24 hours a day. Does your Forex Broker? When you ask them questions, do they answer them clearly and honestly or do they give you the run-around? If your Forex Broker canít answer the 15 questions below, you may want to look for one who can.
    15 Questions You Should Ask Your Forex Broker

    The following 15 questions are based on the above information and relate to basic information that your Forex Broker should answer without hesitation.

    • How long have you been a Forex Broker?
    • In what financial condition is your company? Will you show me your balance sheet?
    • Do you have good relationships with reputable banks?
    • Who is quoting the rates, my broker, a bank, or multiple banks?
    • Are the spreads fixed of variable?
    • How tight are the spreads?
    • Do you offer Fractional Pip Pricing?
    • Are there any trading restrictions?
    • Can I place orders inside the Spread?
    • Can I earn interest on positive rolls?
    • Can I earn positive rolls at all margin levels?
    • Are rollover rates displayed prominently? Where?
    • Does the trading platform allow me to hedge?
    • Can I lose more money than I put into my account?
    • What is the quality and availability of customer service?


    Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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  3. #2
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    Re: 15 Questions to Ask Your Broker

    I trade with OctaFX broker and before selecting them I had proper research and check all these mention things and all I could say is that they got 10/10 marks from me in every single department, it is not easy to be the best for long period but this broker has proven it and consistently they provide us with offers like 50% bonus and also one of the finest trading software like cTrader, which makes life easy for all traders.

  4. #3
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    Re: 15 Questions to Ask Your Broker

    Do you really think all broker will give you honest answers for those questions? Sorry but you're to naive about this.

    Clearly you don't know that, by default, metatrader platform allow brokers to withhold price data feed for as long as 90 seconds. And even then the brokers still able to display a price discrepancy up to 2.0 pips.

    Surprise, surprise....

  5. #4
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    Re: 15 Questions to Ask Your Broker

    I guess no one broker would answer all of this questions. So if you choose broker look at it’s reputation. Find some traders, who has been trading with it for long time, talk with them. Find information about trade volume and number of traders. Pay attention to available actions and bonuses they can be useful for you too.

    - - - Updated - - -

    I guess no one broker would answer all of this questions. So if you choose broker look at itís reputation. Find some traders, who has been trading with it for long time, talk with them. Find information about trade volume and number of traders. Pay attention to available actions and bonuses they can be useful for you too.

  6. #5
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    Re: 15 Questions to Ask Your Broker

    I feel most of these questionís answer are found easily on any brokerís home page. I will just update about my broker OctaFX and I will start with 1 by 1 question. Firstly they have been in this industry for last 4 years, I feel they are in excellent condition because of regular improvement from30% bonus to 50% and this has been the case for nearly 2 years now. Yes, they are great relationship with global banks.

    The global banks are giving rates. Their spread is really tight with just 0.2 pips mostly, but itís not fixed. Itís optional to have 5 digit accounts, there are no restrictions. They allow us to hedge or use any technique; itís possible to lose money till the penny. Their customer service is excellent; I have answered most of questions.
    Last edited by David Ogilvie; 06-09-2015 at 04:09 PM.

  7. #6
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    Re: 15 Questions to Ask Your Broker

    Quote Originally Posted by David Ogilvie View Post
    Their customer service is excellent; I have answered most of questions.
    You mean you are an OctaFX customer service? Well, that's new.Anyway, customer service is one of the first sign whether a broker is professional or not. But it's not a key factor. After all, some brokers with excellent customer services are bad with withdrawal. And we as trader concern most with withdrawal rather than some nice sweet nothing talks.

    - - - Updated - - -

    Quote Originally Posted by David Ogilvie View Post
    Their customer service is excellent; I have answered most of questions.
    You mean you are an OctaFX customer service? Well, that's new.Anyway, customer service is one of the first sign whether a broker is professional or not. But it's not a key factor. After all, some brokers with excellent customer services are bad with withdrawal. And we as trader concern most with withdrawal rather than some nice sweet nothing talks.

  8. #7
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    Re: 15 Questions to Ask Your Broker

    Nice questions! I can add one more to them: what do you do to reduce your customer spendings? For example, FreshForex has canceled the deposit commission for the most popular payment systems. Next week it will be Neteller. Just imagine: we charge an account with $500 and we pay $12.5 as a commission. I'd better buy a pizza for this money than give them to a broker. So I think that idea to cancel the deposit commission is really good.

    - - - Updated - - -

    Nice questions! I can add one more to them: what do you do to reduce your customer spendings? For example, FreshForex has canceled the deposit commission for the most popular payment systems. Next week it will be Neteller. Just imagine: we charge an account with $500 and we pay $12.5 as a commission. I'd better buy a pizza for this money than give them to a broker. So I think that idea to cancel the deposit commission is really good.

  9. #8
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    Re: 15 Questions to Ask Your Broker

    I am sorry, but some of these are irrelevant and is something you need to be aware while starting up in this business. The important factors we need to know with broker is whether they are regulated and whether they are established because thatís where we can gain maximum benefits and is how we will be able to succeed. I am fairly lucky to be with OctaFX broker which supports me to end and thatís too in every think able way!

  10. #9

    Re: 15 Questions to Ask Your Broker

    Prime Broker They are market creator with low quality requests execution, innovations and trading conditions. Their offers like % deposit bonuses, enormous leverage and so forth are simply common offers of retail brokers to trick traders. They are underneath normal forex broker. Try not to trade with them you will be in awesome misfortune. I lose my cash and was going to abandon forex trading. This is terrible broker.

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