Forex broker works on a very unique payment policy. Forex broker do not charge commission on the deals. Broker makes their profit from the difference in prices of the currency, this is called as spread. Buying and selling currency have difference in their prices and this difference is called Forex spread and Forex spread is the source of income for the Forex broker. Forex spread can be 1 pip and even can be even as less as 3 pips; this depends on the terms and conditions. It also depends on currency pair being traded. Rates of broker are different for different pair of currencies.
Forex trading account depends on the piece of the pie taken by the spread. This will effect in short term as well as long term so it is very important to scrutinize the level of spread. Rate should be fixed on the basis of most frequently used pair of currency. Brokers usually try to trap traders by showing high spread for some currencies and highlighting it in their port folio. Trader should select pair of currency, it will deal with, and then broker offering best deal for that currency pair.
Traders should try to stay away from short term marketing maneuvers offering Forex trading spreads that are attractive and low. These spreads are just to trap in traders and may come with hidden charges and hidden policies once you have committed your funds. Such offers usually end soon after you give them your money.
Another important thing to be considered in the Forex market is amount to be invested to start the account. Try to find broker who offers to open account with minimum amount. Starting account with small amount may result in small earnings in the beginning but will make the risk minimum.
Traders must start with small amount in the beginning and then after developing trust on broker and understanding Forex it should go for big amounts.
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