How to Choose and Select a Good Broker

All traders use a broker to handle their transactions. Trader makes a decision on which trade to make, then places an order with a broker who then executes the trade order for them and earns money by charging a commission or a fee referred to as "the spread" for their services.

Gold brokers are associated with large financial institutions such as banks in order to provide the funds and liquidity necessary for margin trading. The banks are known as liquidity providers. Banks are also the ones who provide the inter-bank exchange rate to the brokers. Gold trading is traded through a network of banks known as "interbank network". XAUUSD Brokers gain access to this interbank network through banks, & then provide this access to retail traders.

A good broker should be signed up with a well known regulator like CFTC, NFA, CYSEC, FCA, ASIC & FSP, these regulation authorities serve as a protective measure against fraud and abusive trade practices.

Before you begin you need to set up an account. You may feel overwhelmed by the No. of companies that offer these services online.

Deciding on a good company requires a bit of research on your part as a trader, but the time spent researching will give you insight into the services provided and fees charged.

The best recommendation is word-of-mouth advice, & this is just as valid in gold as it is for any other type of business.

You also want to find a broker who executes orders quickly with minimum slippage and should offer automatic/instant execution and have clear policies and protocols in regard to slippage.

Next you want to find out the fees involved i.e. Spread. If spread charged is fixed or variable. Are there other charges like commissions per lot traded?

Margin trading is what XAUUSD is about, so be sure you understand the margin terms requirements before setting up a trading account. You need to know the margin requirements & how the margin is calculated.

Does the margin change in accordance to the position size transacted? Is it the same every day of the week or does it vary? Some brokers might also offer different margin requirements for mini & standard accounts. Some might also change their margin requirement during the weekend. Don't select those which change their margin requirement during the weekend as this might mean your open positions are more likely to get close over the weekend due to this changing margin requirement during the weekend. Always choose the one which has fixed margin requirement at all times.

The software also is very crucial to a xauusd trader. You can get a feel of the trading platform options which are available by trying out demos from a couple of companies online. Above all, you're searching for reliability and the ability to execute transactions in fast moving markets.

To make sure that you get fast execution from your broker make sure that you trade with big Gold companies that have enough liquidity required to execute orders quickly. The big companies have multiple liquidity providers and these multiple liquidity providers ensure that the company that you select can execute as many trade positions as possible at any given time in a very fast & efficient manner, that way your orders don't get re-quoted.

Factors to Consider When Comparing

Before comparing brokers we recommend that you do not open a account with a US based company, regulation by the CFTC & NFA imposes excessive and over-bearing regulations that have been imposed on US based firms and companies. These include reduced leverage levels, no hedging rule and the FIFO (first-in first-out) rule which affects the in which way you trade. The FIFO rule specifies that the first trade you open must be the first one you close, and keeping track of your orders especially if you open many of them might be difficult for you.

The following are the aspects you should consider:

Regulation

Regulation is a crucial and important factor to take into account when comparing, regulation is carried out by the financial regulatory authorities like FSA, NFA, CySEC & others. You should always open and select and choose a company that is regulated.

Deposit and Withdrawal

In depositing and withdrawing money from your trading account, you should consider the following:

What's the minimum deposit required?

How long does it take to withdraw your funds?

Is there any deposit or withdraw fee?

It is also important that you find out what payment method or money transfer methods are available for use with e.g. Wire Transfer, Credit Card, Debit Card, Pay Pal and others that are suitable for you.

Minimum Deposit Requirements

How much money do you as a trader need to deposit so that to open a trading account? - The minimum for many is $100 dollars but for some its less. This is crucial to take into account when comparing two or more.

Software

The platform provided can be used for comparison and one-can select and choose the best type of platform. Most popular software is the MT4.

MetaTrader 4 is the best software with powerful technical tools and charts that is why most if not all brokers offer the MetaTrader 4. If you are a newbie select one that offers you MetaTrader 4 that way if you decide to move to another one you'll still find the MetaTrader 4 software that way you don't have to re-learn a new software every time you decide to try a new one.

Charting is very important and you need a powerful charting platform with good trading charts and indicators so that to make the right decisions. The best choice is a one that offers good quality charting software like the MT4.

Order Execution

Consider if execution, is instantaneous, is it that of an STP. Best model is STP model, with high liquidity to guarantee order execution.

Leverage & margin

Should give you the choice/option to choose leverage 1:50, 1:100 1:200 or 1:500 for the risk takers who have an appetite for risk. However anything above 1:200 is too high 1:100 is the optimum leverage.

Account Types

Should offer micro, mini & standard accounts for a gold trader to choose the one which they want.

Customer Support

Should provide customer & technical support during the market trading hours, either via E-Mail, phone or online chat.

Before choosing a company to open an account with you might want to check the customer support & professionalism and compare this between different one.

Factors to Consider for Comparison

The fact is that genuine and regulated companies come with a guarantee of at-least being genuine.

The company you choose should be suitable for all trader types whether it is scalping, day, swing or position trading. Most won't accept scalping: these are not recommended even for non-scalpers. Those that don't allow scalping may be because they do not have enough liquidity to guarantee trade order execution of your orders. This is bad even for others traders because your orders may not be filled at the correct point & you may get re-quotes.

A good online broker will be suitable for the Gold traders of all levels of expertise. Beginner Traders should find the conditions to be quite flexible and the trading software easy to use, while professional traders should benefit from high liquidity and instant execution of orders.

The factors & aspects below should be used when comparing, visit their web site look at the information provided and use your judgment to decide if they are is best choice for you.

MT4 platform
Up to 1:200 leverage
Deposit and Withdraw through Liberty Reserve, WebMoney, Money Bookers, PayPal, bank wire transfer, credit card, debit card and other payment options
Minimum deposit $100
Bonuses on deposits
In addition to gold, other financial instruments such oil, gold and silver and stock indices
Instant execution of orders, no re quotes
STP
Professional customer support
Well regulated by a financial regulatory authority

Recommended broker is one that will ensure you trade better by offering you the best tools & support for trading analysis.

Gold means the exchanging of one financial instrument for another in the market. Market is one of the largest market in the world. With main objective to earn substantial profits, new investors are jumping in to the market everyday.

Investors, who take time to know the basic knowledge & information, definitely earn high returns on their investment than those who don't.

However there are times, when investors fail to do anything right in the market due to lack of enough information and awareness regarding gold trading. Thus, it's recommended to choose and select one before investing in the market. A good broker can improve an traders result by providing the best execution of trade order transactions, there are many companies out there that one-can select from but not all are good. One thing to look out for is to choose and select one that's regulated.

While choosing, make sure that they're the best for you. It is not a tiresome task to find a broker having a long list of customers. But it is not enough for you. You should look for a one that's regulated. Also look at their terms and conditions this will help you know about their workings.

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