A broker is a company that acts as an intermediary between the buyer and the seller in concluding deals. Basically, this is your bank, where you savings are stored, and when you are making any trades, broker puts these orders to the interbank market (an ordinary trader can’t get that far). The broker charges a small commission for every trade you make (you pay the difference between buying and selling rates) and this is broker’s earnings. The difference between buying and selling rates is called spread.
You need to be extremely careful when choosing a broker, because stability and safety of your funds depends on that. Consider broker company if it’s on the market for a long time, has 24/5 informational and technical support. Also broker has to have all the necessary licenses, so in case of any problem they can provide you with qualified help.
It is worth mentioning that the country of residence also plays a role. If you live in the USA, you can only trade on brokers regulated by the National Futures Association (NFA). Such brokers have their differences, and not all advisors are compatible with them. For your convenience, we’ve labeled Forex robots which are compatible with NFA like this:
When you have decided on the choice of a fx broker, next step is to select the type of account where you will keep your money and choose leverage.
Leverage – is an interest-free credit that was given to a trader by a broker to trade Forex. Leverage determines how large can your bet (lot) be on a market, it's an opportunity to earn more, but you can also lose more. The larger the leverage, the larger numbers you can trade. If there is an opportunity to choose the largest leverage that a broker can offer – use it. Because this does not impose any restrictions on you, but if necessary, can give you more opportunities for trading. In addition, some Forex systems require large leverage to work properly.
Demo – is a training account, every broker has such a thing. The idea is to try out your trading skills in the Forex market without any financial investments and risks. It's also a great way to test new advisors and Forex strategies.
Cent – an account on which you are trading with real money, but with the 1 lot, the price of one point will be only 10 cents (depending on the trading pair). So when you open a $100 account, your balance will be 10,000 cents. Also, there are brokers with a minimum lot equal to 0.01, which means, every 1 point (up or down) the balance will be changed on 0.1 cent. It’s very convenient, because trader has an opportunity to trade with real money, but losses will remain minimum.
Micro – is an account that allows you to trade with dollars (not cents), but with a very small minimum lot (risk). Depending on the broker, the cost per lot can be 1 dollars or 10 cents (10 or 100 times less than on the standard account type). This kind of account (as well as cent account) will be really useful for Forex robots, that need big seed capital.
Standard – the name speaks for itself, this is a regular account, where the figure of 10 000 means that you have 10 000 dollars in your account, not cents. It means that 1 lot costs 10$. It’s one of the most popular types of accounts, and it often happens that the required minimum initial deposit need to be bigger comparing to micro or cent accounts.
ECN (Electronic Communication Network) – an account that allows a trader to make trades without intermediaries and deal with the best prices. This kind of account is especially suitable for those who need to fix their profit in couple points, i.e. to make a short-term deal (scalping). ECN has a small spread, fast execution of the orders and has no requotes. However, depending on the market situation, the spread can be dynamic (floating) and increase. For each trade, the broker charges an additional commission.
Swap-free. A swap is a rollover of the bet to the next day, for which an additional fee is charged. If you have such an account (swap-free), then this commission is not charged from you, instead some brokers add their interest for an open order or overcharge for the spread.
Note: Depending on the broker, the account types names may be different.
After choosing a broker, you need to decide for yourself what goals you will pursue, i.e. develop the strategy and decide whether you will trade manual or will be using Forex robots.
More about forex robots and manual trading here.