Forex: Are you asking these questions to your broker?
The internet offers you a host of articles focused on Forex and you can expect around 50% of those posts to contain effective tips and tricks to choose a Forex broker wisely. They will most commonly tell you about regulatory compliance, customer services among other such things. However, not many of them will acquaint you with a few questions that you should ask your potential broker forex trading.And, we intend to do just that. Let us go through the questions that you should ask your brokers without fail – in order to determine whether you should hire them or not. So, let us read on to find out what these questions are:
Who will execute orders on my behalf?
Different brokers might have different ways of executing order. A “No Dealing Desk” would mean that there are several banks competing the prices through the Forex broker chosen by you. In this case, it’s the banks themselves execute the orders. With a “Dealing Desk” however, it’s your Forex broker who creates the pricing and executes orders. The spreads are fixed, that again means that the spreads are higher than variable spreads on an average.
Will I always be able to avail the advertised spreads?
Advertised spreads are one of the ways in which brokers generally play with you. Sometimes they advertise as low spreads as possible without even revealing the length of time till which the spreads are available. Besides, enquiring about the length of time you should also ask whether other conditions apply or not. You should also be able to have a glimpse of the entire record of all the recent spreads in order to be completely convinced they are actually offering you the spreads that they are advertising.
What about the rollover benefits offered by you? Is there any such benefit offered by you all?
You should ask whether the Forex broker pays positive rolls or not. Rollover refers to interest paid on Forex positions held overnight. The rollover fluctuates in accordance with the difference in the rate of interest between a currency pair. The rollover fluctuates every day. A Positive Roll is something which pays higher rate of interest when you buy a currency pair. So you get interests. A Negative Roll, on the other hand, is when you sell a currency pair with higher rate of interest. So, you have to pay higher rate of interest. There are very few brokers who offer Positive Roll. There are many who offer Negative Rolls. Please make sure you are actually clarifying your doubts in this particular regard.
Do I have to pay additional fees other than the spread?
There are a few brokers who offer low spreads but charge you extra fees to keep their profit margins intact. So, besides enquiring of the length of time till which the “low” spreads are available, you should ask whether or not you should pay extra fees or not besides the spread or not.
Hope you will keep these points in view before hiring a broker.