Choosing a Broker

With hundreds of brokers to choose from traders may not know which broker to choose. A trader might not know which factors & aspects to look for when selecting their broker, this tutorial will explain to traders more about brokers & what factors traders should consider before deciding which broker to open an account with.

In trading there is no central market where trade transactions are settled, instead trades are carried out in an Over The Counter OTC market. Because there is no central market place trade transactions will be settled in the online inter-bank market. This online inter-bank market is composed of a network of big banks. For traders to gain access to this gold market they must trade through a broker. The broker will place trade transactions in inter-bank market on behalf of the Gold traders.

Traders can not trade directly on the inter-bank market because they do not have the capital to set-up the technology for accomplishing this neither do they have the minimum required capital that is required by the big banks to allow them to trade directly in the market. For this reason/explanation retail brokers exist so as to connect retail traders to the online inter-bank market. Retail brokers will allow traders who don't have a lot of capital to trade with in the market.

Brokers also provide trading leverage so as to help traders to open trades with borrowed funds. Because lots are traded in units and most retail traders can't afford this amount, the brokers provide this gold leverage so that traders with little capital to invest can also be able to trade the markets on borrowed funds. The borrowed funds are borrowed from the broker, a broker providing leverage option of 100:1 means that retail traders can borrow up to 100 times their capital, henceforth a trader with only $1,000 can borrow upto 100 times which means $1,000 dollars multiplied by 100 is $100,000, this $100,000 will be the capital that is available to the trader after using leverage and thence the retail trader who only has $1,000 capital can now trade standard lots.

What To Consider When Choosing Your Trading Broker

The following factors should be used to figure out which broker you'll select to trade with.

Regulation - The first thing to consider is gold broker regulation license. You should only open an account with a broker that is regulated. In trading the most reliable and most transparent online brokers are the ones which are regulated. This is why this is the first thing that most traders will look for before they even start considering whether to open a trading account with a particular online broker or not.

Withdraw Policy - Try to find out the withdraw policy of a broker before signing up an account with them. Best withdraw policy is one where you as a trader can withdraw your money any time you as a trader want without any questions asked. This policy should also provide that the withdraw should be instant if you are using a credit/debit card to withdraw or should take one business day if you withdraw using bank wire method

Execution Policy - the best order execution policy is a no requotes execution policy where orders are executed within one second or less. This means that you as a trader can open & close trades quickly and your positions should be re quoted. A requote means that you will have to place a trade position again once the Gold trade transaction is re-quoted. A requote will happen if the execution of your online broker isn't fast enough which means that the quote will change before you have completed putting your trade position and therefore you have to make another trade.

Gold Quotes - traders should choose and select a broker that provides a wide range of instruments that they can choose & select to trade. In addition to gold, traders may select to choose broker who offer other financial instruments for trading like commodities, CFDs, Futures, Metals such as silver and gold & stock indices.

Platform - choose a broker that uses MetaTrader 4 software. Almost every broker uses this platform. As a trader make sure that the platform of the online broker you choose allows automated gold trading especially for those traders that trade with automated bots.

A trader might also use other factors & aspects to decide what broker to open a account with based on the preference. On this site traders also can find a list of the top 100 gold brokers on the broker ranking section of this site & traders might use this list to find the broker of their choice.

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Choosing a Broker

What To Consider When Choosing Your Trading Broker