How to Get Started in Forex

The most important step to getting involved in forex trading is to find a good, honest and reliable broker.  More knowledge about forexwill mean sound investment capital management. The following tips will help in making your selection.

• The forex company chosen should be certified and authorized to accept traded currencies. In the US, a broker must be registered with FCM (Futures Control Merchant) and are governed by the CFTC (Commodity Futures Trading Commission). Larger forex brokerages are also associated with banks and other financial institutions. The CFTC has a website that is available to find more information.

• Low Spreads are the difference in the currency purchase price and the selling price of the commodity. When seeking a broker, you will notice there are many spreads in forex.  The spreads can mean a large amount saved in the long run because forex brokers do not charge commissions like stock brokers. Lower spreads mean less money out of your pocket.

• A good broker should be affiliated with top quality financial institutions because of the large dollar amounts involved in purchases of forex commodities. The broker’s financial institution should be a member of FDIC so the investment is covered up to a certain dollar amount.


• Brokers should offer research information and tools for the potential forex customer. Different platforms are available to forex investors just like in other commodity trades. Sometimes the platform or “package” can be customized to suit the needs of the potential investor. A good option is to test platforms by using the “try before you buy” method. Also find out what tools are available before selecting a broker to work with.

• Choose a broker that has a high leverage plan available especially if your forex investment capital is low. High leverage is important in forex trading due to the constant fluctuation in prices. Leverage is the ratio of the total capital that the customer has available compared to the total capital in an account. The difference is amount the broker will let an investor borrow for forex purchases. A 100:1 ratio means a broker will allow an investor to use $100 per $1.00.

Remember that different forex brokers offer different leverage levels. Some brokers off 50:1 and some also go higher than this.

• There are many different account types that are available.  Account types vary depending on the capital available for investment.  A mini account will allow you to trade with minimum dollar amount set by the broker. A standard forex account will allow trades for higher dollar amounts; again, this also depends on your investment capital availability. Premium accounts allow investors with larger sums of capital to invest at their maximum level.

Do not select a broker that does not have different level accounts.  Be sure to consider leverage and tools to suit your needs and level of capital investment. Keep in mind that you are the boss and not the broker as the investment money belongs to you. The final say is yours.