1. Qualifications. Probably the most important thing of all is ensuring the Forex broker you use has the correct qualifications. Therefore, choose a broker registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM). This means that you have legal protection against any abusive trading practices and scams that may arise.
2. Is the broker regulated? This means that when you sign up to use their services you will have protection and insurance against any internal fraud. Also, your funds will remain separate from the broker’s operating funds.
3. What business model does the broker use? Some brokers are market makers while others are ECN brokers, providing a dealing desks for many traders.
4. Look at the types of spreads they offer. The spread is the difference between the bid and ask prices of the currencies you trade. Brokers do not make a commission on your trade, instead they take the spread as compensation. Your broker may also offer fixed or variable spreads, and they can be different for large accounts and miniaccounts.
5. Slippage. Can they provide you with details of just what slippage they would expect to occur during normal and fast moving markets?
6. Margin requirements. What is their margin requirement. That is, what percentage of the investment in your trades do they expect you to pay to open a trade. You also want to know about their margin calls, and the time you need to respond to such calls.
7. What is their Rollover Policy? Do they have any minimum margin requirements which they use to earn interest on any overnight positions? Plus, do they have any other requirements or conditions about you earning interest on any rollovers.
Once you have done your research and have selected one or more Forex brokers, then it is time to set up your trading account. When your funds clear you can begin trading. Remember to read carefully the trading instructions to know how the broker can help you manage your trades. If you overlook some relevant details, you can lose money on your first trade. So take the time to read the details and ask the brokers or their support staff any questions you may have before you open your first trade.