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Thoughts on Forex Dealers |
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Forex Dealers and Brokers
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This is a topic most traders are passionate about. Because the retail forex market is dominated by short- and medium-term traders, most forex dealers have a focus on quality and ease of execution to cater to that trading style.
But there are still significant differences between dealers and you need to understand these in order to pick a preferred dealer. In this section, we will discuss the internal characteristics, as well as well as the external benefits you should look for in choosing a dealer. For instance, you have to decide whether you will trade forex futures, or spot forex, a topic I will cover tomorrow.
Looking under a dealer's hood - Internal Qualities
1. Regulation The forex market is nearly unregulated, and this means that there are plenty of small “bucket shops” out there soliciting business. Recently, there have been some changes to regulations in the U.S. and Australia that have cleaned up the dealer market somewhat. This is helping good dealers stand out from bad ones.
Dealers usually have to register with some regulatory agency or association. You can find out a lot of information about them—including principles’ names, history, disciplinary problems and complaints by checking out the regulatory agency's website.
2. Capitalization As a registered financial service provider, a dealer is required to maintain a minimum level of capitalization, or money in reserve. This has a direct impact on their ability...Click here to continue
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