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As a new Forex trader you will begin by gaining information on the market and then putting this information to practical use. After practicing on the demo accounts you will eventually gain enough confidence and be ready to move on to the real trading center. This is the time when the need to choose a good Forex broker will arise. Once you begin your search for the broker you will also find a lot of information telling you about how these brokers can be frauds and how many a times they will trade against their own clients. Needless to say, this is all very disheartening for the novice trader.

Research does not yield clear results

While one may feel that the reviews on the net will be enough to take a call on which broker is worth depending on and which ones should be disregarded, this is not the case. In the case of broker reviews there is no saying which review is an honest one and which one is biased. There are brokers who will post really bad reviews about their competitor in order to bring them down and then there are those brokers who will post good reviews about themselves in the hope of promoting their business. So, the trader is still left wondering about how to make a choice.

Here, it will help to understand the various types of brokers and how they function.

Retail Broker – These are brokers who will benefit from the failure of their clients. These brokers trade against their clients and so each time the client loses the broker makes money.

Usually if you look for broker reviews you will be able to see if it’s that kind of broker.

These professionals are known to change prices, widen spreads and also trade against their clients in order to make more money off the client. Interestingly, despite the knowledge that the broker is trading against them there are traders who will hire these brokers. This is because there are some advantages that the brokers offer. To begin with, they provide the clients with high leverage options. The client can open an account with very little minimum balance requirement and the demo account is made available to the client for a lot longer that the usually one month period. These brokers also allow for small mini trades, which is very comforting to the new trader who would like to take baby steps in the market.

Without Desk Broker –These are the brokers like ECN who will charge spreads and commissions on trade in order to make their money and so, will not be affected by the gain or loss of the trader. These brokers do gain more when the traders trade more but short of this there is nothing else the broker is effected by. The leverage options in this case are rather low and the minimum deposit amount is much higher than the retail brokers. However, these brokers will not manipulate the market by raising prices or widening spreads.

At the end of the day the trader will have to test a few brokers personally and make a decision based on the outcome of this test.

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