Firstly, look at the way they advertise. What are they saying to you? Of course they will want to attract your custom by telling you about the benefits of forex trading and the possibility of making lots of money. However, they should also be realistic and tell you about the risks. Many traders entering the market for the first time are blind to the risks and ‘dive in’ too soon.

Look for a broker who clearly states the risks and in doing so gives you some automated protection in your account, particularly the closing of trades when the funds in your account are in danger of being insufficient to cover a losing trade. This is particularly important for beginners who may not spot a potentially bad trade until it’s too late. Be aware of the leverage offered. In the Forex market we see the highest leverage ratios being applied. Typically 50:1, 100:1 or even 200:1. At the lower end, 50:1 or 100:1 is normally provided for a standard trade of 100,000 units of a given currency. For smaller trades of $50,000 or less 200:1 is the norm. So make sure you understand how to apply stop losses and make sure your broker will hold your hand on this and apply stop losses automatically until you acquire the necessary trading knowledge and skills.

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