Okay, so I’ve been trading Forex with different demos for a little over a year and have started making decent money at it. I want to open a 10K account somewhere but from the reviews I’ve been reading it looks like I am better off taking my money to the casino. Stories of people losing money with shady companies and poor business practices seem to overwhelm the Forex community. As much as I think I could make good money getting into FOREX, I am extremely hesitant to take that leap and furthermore have no idea of a broker that I could go through that is even the least bit dependable. I understand that every company is going to have problems but the stories I have been reading aren’t even little problems, its more like strong arm robbery. I don’t mind losing money due to my own bad FOREX decisions, but I 'm not trying to lose money because some shady broker feels like they can just do what they want. Any advice for a wanna be Forex player?
Any advice for a wanna be Forex player?
First off lose the negative attitude, there are good as well as
bad reviews out there, it’s just that bad news always seems to
be at the forefront.
With $10 000 I would look to an ECN type broker, maybe hotspotfx,
interactive brokers, mbtrading, etc.
Or Oanda with maybe $1 000 until you feel confident about their
platform, integrity, etc. plus you will also have that much more
experience.
Learning to trade does not just involve finding a winning system,
it is learning the whole business of foreign exchange trading.
This first part is not really answering your question but it’s something that has to be said.
You should not open your first account with $10k.
Transitioning from a demo account to a live account can really shell shock you and you don’t want to lose $10k. Even if you’re trading profitably on a demo you should start with a small amount of real money. This allows you to:
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Become accustomed to trading a live account by taking small steps. As opposed to jumping right into the deep end.
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Gain confidence in your live trading skills.
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Better control the added emotions that come with trading real money. Trading real money adds fear and greed into the equation. No matter how much you tell yourself it will be the same as a demo it is always different. It can be a slight difference or a drastic one.
The point is that managing fear and greed on a $1k account is much easier than managing those emotions on a $10k account.
If you’re the master of your emotions you can throw in that extra $9k after a few weeks. After all you have been demo trading a full year, a few weeks of trading just $1k wont kill you.
Of course if that $10k is an insignificant amount of money to you all that stuff above doesn’t matter.
Ok now onto the business of choosing a broker.
I use two brokers and I would never go with anybody else. these brokers are:
These are two professional NFA regulated brokers. I doubt you will find many bad reviews about these brokers.
If you’re using the review site I think you’re using (the scam FPA) that site is full of news traders. News traders hate all brokers because they expect fast execution at the most volatile times. No broker will give perfect entries after the release of major report, it just doesn’t happen. So you will find a lot of bad reviews about brokers on that site.
You should also consider that most newbies are clueless and blame their own stupid mistakes on their broker. So really broker reviews should be taken with a pinch of salt.
To find a broker I follow a few general rules…
[B]1. [/B]Make sure they’re regulated by the regulatory body for the country in which it is located. This means you ask them for the reg number and you actully check it up. [B]DO NOT TAKE THEIR WORD FOR IT[/B].
[B]2. [/B]Use common sense. If the broker has a $20 website and is located in the Cayman Islands it’s probably not safe to give them your cash.
[B]3. [/B]When you call them [B][U]grill them[/U][/B]. Set out all your questions before hand and ask away.
Any sales rep worth his salt should be able to answer all your questions. If you’re not happy with the answers its probably not the broker for you.
[B]4. [/B]If it doesn’t feel right do not give them your money.
[B]5. [/B]If it sounds too good to be true it probably is. For example:
[B]
‘1 pip spread on GBP/JPY and NO COMMISSION’
[/B]
Too good to be true.
The next point I should make is that you should never put all your capital with a broker. If you have $10k to trade with only put enough to cover whatever max draw down your money management plan allows for.
Especially with the current economic crisis if a broker goes broke you don’t want them to have all your cash.
Personally I only have 5% of my trading capital with my broker. The rest sits in the bank earning interest. No reason to have more than you need with your broker.
After the absolutely excellent answers by both [B]Daydreamer65 [/B]and [B]NickB[/B], I would like to add only one point but a very critical one.
You must now answer the part of your statement I have quoted above…
[B]Do you really want to trade forex?[/B]
Be absolutely sure about your decision.
If no - end of matter.
If yes - start with the counsel of [B]Daydreamer65 [/B]and [B]NickB[/B] above.
Props to NickB for a FANTASTIC post. :):)
NickB, thanks for the feedback. I think I am going to go ahead and take your advice and open up a 1K account and get the feel for it.
You can always check to see if the broker is registered by looking at the Commodity Futures Trading Commission (CFTC) website at National Futures Association - NFA is a regulatory service provider for the derivatives markets 
I think the 1k account is the way to go too. Just be careful because you won’t be making money very quickly on smaller accounts, so that is another emotional input that you’ll have to conquer (after all, we are here to make money, so be careful).