There’s a lot of them about – from big to small, good to bad, there’s no perfect broker. What you need is a broker that suits your requirements at the time, giving you the services you need, charging a fair rate for the job. In time, your requirements will change, so looking around at what’s available is a constant process…

Trading Platform Software
Trading platform softwares come in two types. Firstly web-based, ie. you view them in your browser – or secondly, as a downloadable program you install on your computer.

Since most of the major internet forex brokers were set up around 1998-2002, much of their web-based software is Java-based, which is starting to show its age a little. There are one or two brokers around who offer Flash-based interfaces.

Do note that quite a few downloadable software packages are a Windows-only deal – no Mac version available.

Whatever the software, you will need:

• to view real-time currency exchange rate quotes,
• to be able to quickly open and exit a trade,
• a summary showing your current balance, with realized and unrealized profit/loss, and the margin available.

Always open a demo account and test out the broker’s platform before opening a real account! A complicated, cluttered or plain weird interface doesn’t help with the trading at the best of times.

And the only other technical point – don’t think about trading forex these days if you haven’t got a high-speed (broadband) internet connection – dial-up just won’t do…

Charts and technical analysis options
These vary widely – and requirements can vary widely as well – you may want every option ever invented at your fingertips; equally, you may want to keep it simple at the beginning… you decide.

A good news calendar integrated into the software does no harm – but these are readily available elsewhere on the internet.

Execution
The exact terms and conditions offered by different brokers for trade execution will vary – as will their definition of terms like ‘instant automatic execution’, ‘guaranteed execution’, ‘guaranteed price’. Together with rollover charges, this area gives rise to the most problems in the smooth running of client-broker relationships.

No online broker will fill every trade you ever make absolutely perfectly - not possible, even with the best of intentions on both sides. Some brokers have occasional isolated problems, particularly at news release time, and some have a consistently poor record. It’s for you to weigh up their performance and vote with your feet accordingly…

Minimum Trading Size Requirements
Some say “Open an account with just $1″ – well, you can do that, but it won’t get you very far, very quickly.
Micro accounts can usually be opened for around $200-250, designed for those beginning in currency trading or with limited investment capital.

Leverage/Margin
Don’t go for a broker just because they offer 400:1 leverage. As a beginning trader, you don’t want to even think about this option. 200:1 is the maximum you should be considering while operating mini or micro forex accounts. It’s always best to have the capital on your side.

Available Currency Pairs
The majority of forex brokers offer the seven major currencies USD, EUR, GBP, JPY, AUD, CAD, and CHF, but most won’t offer all permutations of these currencies as pairs. Many also offer as standard some pairs involving a ‘minor’ currency eg EUR/NOK, the Norwegian Krone or USD/SEK, the Swedish Krona.

Some offer you the chance to trade gold, silver or crude oil on the same account – but we’re not here to get into that kind of business…

Transaction Costs – the bid/ask spread
You don’t pay a broker’s commission in forex – you pay the ‘bid/ask spread’ on every trade. Transaction costs are calculated in pips. The lower spread in terms of pips, the better deal it is for you.
At present, the bid/ask spread for EUR/USD is usually 3-4 pips, but 2 pip spreads in this pair are occasionally to be found. Most of the major brokers operate to very similar plans, and you probably won’t find much difference between them. Lower spreads, as with everything, tend to come with the larger accounts. And again, there are times when headline spreads are not available – check the small print…

Rollover Charges
At the close of business, whenever that might be with your particular broker, rollover charges are applicable – if you’re not familiar with the mechanism of this process, see the full discussion here. For our purposes, just make sure you’ve read your brokers’ policy on rollover charges and that you know when exactly their rollover time comes.

Margin Account Interest Rate
Most brokers will pay interest on a trader’s margin account – you’ve put money with them, they owe you some interest, like any other form of holding. The rates will normally follow the relevant national rate, depending on the default currency of your account. But don’t imagine this is any kind of way to invest your money efficiently…

Trading Hours
Most brokers fix their hours of operation with the global Forex market: 5:00 pm EST Sunday through 4:00 pm EST Friday – rollover times vary.

Support
Vital – usually the make or break for any forex brokers’ service. Can you contact the firm by telephone, email, web-based chat, etc.? And if they say you can, do they reply…?

Some brokers’ reps know what they’re talking about and some definitely don’t. (While some seem to show every sign of knowing and you only find out later…). If you’re not convinced by the response – well, you’ve tried the demo, you may not be entrusting them with any of your real money… But don’t start with the aggressive, ‘I know my rights’ spiel – be gentle with them and they usually react well.

You can always sign up with a few different brokers’ demo accounts, and give their support a test run before you hand over any real money – although levels of service have been known to change post-sale compared with pre-sale…

And fx is a 24-hour market – anything less than 24-hour support isn’t going to do the business…

Again, the fine detail
All investment involves fine print. And forex brokers have definitely got fine print – not too suprising, there’s a lot of factors involved.
Read it – don’t just click ok blindly. This is one of the times where, if you’ve read up on forex trading in general, you will be able to understand what is going on. All reputable brokers will have information on margins, rollovers, slippage etc available before you sign up for a real account.

Conclusion
In summary, finding the right broker for your own trading plans is a vital part of the process. It’s not a simple business and does require some careful research on your part – it might result in the odd false start, which you can put down to experience and know better next time round. So don’t pick the first one that looks halfway ok – keep looking around at brokers’ sites and trying their various practice accounts.