Trading gold is far more expensive compared to trading any forex currency pair, this is because the minimum pip spread requirement for Gold is from 40-60 pips. This varies from broker to broker that is why partnering with the correct broker is critical to your success in gold trading.
5 simple steps in choosing your correct broker
Step 1: Know your requirement
Before anything else you must understand and know what you need from your broker. Here are some basic questions that can guide you on identifying your broker requirement.
1. What will you be trading? Forex, Gold, Silver, Stocks, Commodities.
2. How much are you willing to invest? Start up and additional funds you will put up.
3. How are you going to fund you account? Bank wire transfer, Checks, Credit card.
These three (3) basic questions can now help you identify what you need or what you are looking for a broker. You then move to step two.
Step 2: Study brokers profile available
There are a lot of brokers offering different services and products available online and this guide can help you streamline your research to finding qualified brokers based on your need and requirement. Here are some points you should consider.
1. Broker registration. Here are the regulating authorities your broker should be accredited or a member of with good standing.
a. United State based brokers
i. NFA – National Futures Association
ii. CFTC – Commodity Futures Trading Commission
b. United Kingdom based brokers
i. FSA – Financial Service Authority
If they are not registered with these authorities or any other qualified authorities you should then think twice before signing to this kind of brokers.
2. Leverage. Leverage is a double edge sword it can harm you both ways. Look for brokers that have flexible leverage that will suite your trading profile.
3. Spread. This is how most of brokers earns from your trade, some offer fixed spread while others offer variable spread. Since Gold spread are normally very high, you should look for brokers that offers very competitive spread in Gold.
4. Charting Services. Brokers normally offer charting services that will help you trade using technical analysis. You should consider how user friendly their platform and how it suits your trading style.
Step 3: Funding your account
It is suggested that for beginners you should not trade with real money first or at least not using large amount of money. Look for brokers that accept a small amount of money as your initial fund or capital and also offers demo trading. This will enable you to start trading with very minimal consideration as to the amount of money you are risking.
Step 4: Compare brokers that qualified to your requirement
This will be the deciding factor on where you will first open your trading account, whether it’s for Gold trading or forex trading.
1. Compare their company information like, headquarters, number years in the industry, company size in terms of employee and capital.
2. Compare the account options they offer. Check spread, leverage, initial capital requirement, deposit options, withdrawal process and options, rollover interest.
3. Trading platform. Look for simple and accurate trading and charting platform. MT4 – MT5 are a good gauge of brokers that offers a good trading platform.
4. Finally give a high consideration to their customer service.
Step 5: Open a demo account and start trading
This is the only way you can say that your broker is true match to your requirement. Try their services and provide them feedback on how they can better serve you.
Having the right broker is critical to your success in trading, ensure you take the necessary time to learn and understand how to get the right broker.