Whether you are planning on dabbling in forex trading as a primary means of income or as a way of supplementing your primary income, the first thing you need to do is find yourself a good broker. A Forex broker is the person who will actually carry out the trade on your behalf, for which you will have to pay him a pre-stipulated commission.

What to look for in a Forex Broker

Expectedly, the forex market is teeming with brokers hard-selling themselves in an attempt to increase their clientele. Trying to ascertain which one is best, is easier said than done.

Here are some aspects to take into consideration when you are looking for a good Forex broker:

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Cost of Transaction – A forex broker’s fees depends upon the bid/ask spread. You should ensure that there are no hidden charges or fees. However, you could be charged extra if you wanted access to optional services or specific reports. Goes without saying that the smaller the spread; the more advantageous it is to you. Pip spreads differ greatly not only by currency pairs but also from one broker to the next and it is important to shop around for the best rate.

Availability of Currency Pairs – At the very least, the broker should have what are considered the big seven currencies including USD, GBP, EUR, CAD, JPY, CHF and AUD. However, if you intend to trade in any currency other than these seven, it is important that you should ensure before hand whether or not your broker is capable of handling the transaction.

Instant Execution of Orders - One of the most distinct characteristics of the forex market is that the currency prices are always in a constant state of flux- up one minute; down the next. When executing an order on your behalf, a delay of even a minute can cause you either an unexpected but welcome windfall or a staggering loss. It’s not a risk you want to take on a constant basis. A good broker should typically be able to execute your trade as soon as he receives instructions from you so that you in effect buy or sell your shares at the price that you see on your screen. Occasional delays are inevitable, but they should be the exception; not the norm.

Free Tools – While any broker would charge a fee for advanced services, you should expect to be offered at least a few basic services at no cost. A quality broker will also allow you access to professional technical analysis and charting tools that would help you plan exact entry and exit points, analyze current prices and map current market trends.

Minimum Account Balance – Unless you are well experienced with forex trading, it is best to look for a broker that would open up a kind of mini-account for you with as much as $300 or less. It’s always better to test the waters before plunging in whole-heartedly, especially when it is something as volatile as forex trading.

Margin Requirement – Keep in mind that a lower margin requirement increases your leverage and increases your odds of raking in tremendous profits. If the broker allows you to employ a leverage of 100:1 you can basically trade $10,000 in currency for a mere $100. You could get wiped out very fast if you margin yourself too much however, so you need to be careful not to overdo it either ways.

Outstanding Customer Service – Underestimating this aspect could very well turn out to be one of your biggest mistakes; worse still, you will only realize it at a time when you need your broker’s help the most. A good broker should either employ knowledgeable reps or be personally available 24/7 to clarify your doubts immediately either by phone or by email.

A User-friendly Trading Platform – Different brokers have different modi-operandi. While some may allow you to trade directly over the internet, others may need you to download a specific trading program through which you can then trade. Check out all the different options, shortlist the ones you think have the best potential and test them out for a while before zooming in onto the one you plan on using long-term.