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Forex broker strategies
In this topic 4 main Forex broker strategies are described. They are "Kitchen" strategy, "Brokerage" strategy, "Fixing losses" strategy, "Pseudo-brokerage" strategy and "Clearing-house" strategy.
There are a variety of things that are similar in the Forex as well as in the equity markets. However, there are major differences as well.
As there are in any other markets, you will have many Forex brokers to choose from. Following are some things you should look for:
Low spreads - The spread is calculated in "pips". A currency is usually purchased in pips and it can also be sold in pips at any time. The Forex broker does not charge a commission. Therefore, this is the way that the broker makes his or her money. Here is a tip: Lower spreads will definitely save you money.
Quality Institution - Due to the large amount of capital that is required, Forex brokers usually hook up with large banks and lending institutions. The Forex broker should usually be registered with the Futures Commission Merchant as well as being regulated by the CFTC or Commodity Futures Trading Commission. You must be sure that the broker you choose has the backing of a reliable institution.
Extensive Tools and Research - A variety of different trading platforms are offered to a Forex broker's clients. Before you make a commitment to any broker, always request free trials so that you can try out the various trading platforms. Here is the bottom line: Find a Forex broker who is concerned with your success.
Wide Range of Leverage Options - In the Forex leverage is necessary due to the fact that the price deviations are only fractions of a cent. This is the amount of money you will receive from your broker for trading. You should remember this: Lower leverage will means lower risk for you. You can also consider that you are getting a lower bang for your buck.
Account types - Two or more account types are offered by many brokers. If you do not have that much money to invest, you can settle for a mini account for about $250. The standard accounts allow you to trade with various leverages but you must begin with the initial capital of $2,000. The premium account requires that you put down a large amount of capital, but it allows you to use various amounts of leverage. You will also be offered additional services and tools. The bottom line is this: Make sure you choose a broker who has the proper amount of leverage, services and tools that are relative to your amount of capital.