You must read Part I of this article before reading this article. You need to ask a broker many questions before you choose one. When choosing the forex broker, you should look at the spread size and its dependence on the contract size? Spread is the difference between the bid and the ask/offer price given at any instance on the trading terminal of the broker. The smaller the spread size, the better it is for you as the trader. Spread is your cost of trading and the brokers profit.
Many forex brokers charge spread up to 5 pips under steady market conditions. Spread up to 5 pips is reasonable. It should be acceptable. Some brokers will offer spreads lower than 5 pips if you trade contracts of $500,000 or more.
ECNs (Electronic Communications Networks) offer spreads of not more than 1-2 pips maximum. But they require initial deposit of $10,000. If you have $10,000, then its better to open an account with an ECN. The rates offered by ECNs are interbank and are far better than most of the retail forex brokers.
You should look at the additional service like analytical, data, news, quotes, graphics and such offered by the forex broker. Online forex trading is quite popular now. You can monitor currency market movements by following current real time prices, graphics and even news on your laptop or PC monitor.
Does the broker provide trading software with the opportunity to manipulate, modify, and customize graphics; technical analysis using indicators and draw trend lines with support and resistance lines? This can save substantial money by eliminating the necessity of buying an expensive market quote service and analytical and charting software for conducting technical analysis.
Does the broker charge commissions? Does the broker charge other payments and dues? The most reputable forex dealers charge no transaction fees. Reputable dealers when transferring an open position to the following day execute the rollover operation. Interest is charged or deposited in accordance with the current LIBOR rates. The rollover is reflected in your daily statement.
Depending on the currency pair and the direction in which the position was opened at the moment of its transfer the next day, the client could actually win as the result of the transfer. A certain interest would be added to his account just for holding the position for more than one day.
Sometimes a trader will hold two opposite positions overnight. For example, a trader may have executed USD/CHF transaction for the total amount of $400,000 buy and $200,000 sell. Then the long position of USD/CHF amounting to $200,000 should be transferred to the next day and the corresponding interest deposited or charged to the traders account accordingly.
Most forex brokers always charge the client interest for holding the position overnight regardless. They do not bother with these calculations. Many brokers will charge interest for practically non existent positions. You as a new trader should know these facts. You need to choose you dealer after due diligence.