If you are a retail or small institutional forex trader, most of us have to trade by way of a forex brokerage firm. The larger you're the closer you move to the major market participants - banks, mutual funds, hedge funds, large investment firms. They occupy about 75% of the forex market capitalization. Some banks could possibly be brokers themselves. The residual 25% are individual traders like you and me, and small trading firms.
Selecting the best forex broker isn't a fixed activity. It is a dynamic one according to more than one of the next factors: -Regulated or non-regulated forex brokers. -What stage of one's trading career you're in. You trade for your own money or manage other people's money as well. -Amount of one's trading capital. -Services of a certain forex broker that address your requirements for trading. -Tax implications in the event that you open trading account with a broker domiciled in U.S. or U.K. or Switzerland or tax haven countries like Hong Kong, Singapore, British Virgin Island, Bermuda, Cyprus, so on. -Changes of the regulations. For example, a fresh leverage of 50:1 (the old one was 100:1) imposed on U.S. based forex brokers effective on October 18, 2010 has already impacted on traders having accounts with them. Unlike the stock and commodity markets, the forex market is loosely regulated. Regulation is voluntary rather compulsory. Brokers that elect to be regulated hopefully luring in more clients opening accounts with them. Having your fund deposited in a controlled forex broker certainly enhances the chance of one's fund safety. Details of this problem are discussed in the section'Safety of Your Funds '. If you've just started off or are exploring a forex trading career, there are lots of choices of brokerage firms out there for you personally today. Your objective in this stage is probably to test the water. You can deposit several hundred or thousand dollars. This can be a relatively little bit of trading capital. However, once you progress together with your trading career, tens of thousands or even countless thousands or millions dollars are large levels of money, your most concern will be the safety of one's fund. On another front, some individual traders and trading firms are involved about minimizing tax expenses, they could elect to open accounts with a certain country domiciled broker for the tax purposes. At this time in time, U.K and Switzerland based brokers are likely popular choices since these countries are tax havens as well as having well established regulatory bodies for the forex market. Other Caribbean tax haven countries like Anguilla, Bahamas, Barbados, Bermuda, British Virgin Islands, Cyprus, etc; Panama, the Russian Federation, Costa Rica, might lack such well estabished regulatory bodies. At the moment of writing, some top forex brokers setting up offices in Hong Kong and Singapore are on the rise to supply clients with better regulatory reputation and tax advantage. Due to the recent collapses of large and well established financial giants like Lehman Brothers (U.S.), Northern Rock (U.K), Kaupthing, Glitnir, Landsbanki (Iceland), and other smaller financial institutions all around the world, experienced implications on other financial markets including forex. One of many evidences is that, in October 2010, the National Futures Association (NFA) in U.S. imposed new leverage rates of 50:1 for major currency pairs and 20:1 to the cross ones from the typical 100:1 to retail clients from all forex brokers domiciled in U.S., while brokers outside U.S. haven't any impact from the changes. By saying that, it doesn't mean either an optimistic or negative news, this will depend on who discusses it! For a community of winning traders it doesn't matter an excessive amount of as you can find always better opportunities arising from the changes, while the majority of losers keeps complaining in regards to the changes. Successful traders consider their brokers as a risk point inside their trading systems. So that they understand the principles of the game and do everything they are able to to minimize the risks related to the brokers.
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