Online forex broker is a firm that accommodate traders with online trading platform to buy or sell foreign currencies. As a trader, you will use these brokers services to access the forex market 24/5. Thus, selecting the right forex broker is a very important step if you want to take part in forex global trading.

By standard, these brokers are gain money through the difference between buy and sell price. For example: EUR/USD bid price is 1.4613 and ask price is 1.4616. If a trader makes entry to the market at this point he can either buy at price 1.4616 (ask) or sell at price 1.4613 (bid). In this instance the spread is 4616-4613=3 pips.

An online forex broker will apply different spread for different currencies, so make sure you check this information on their website, especially the currency pair that you have interest in. Common currency pairs such as EUR/USD, GBP/USD, or EUR/CHF usually have low spread; about 2-4 pips. But other currency pairs like CAD/JPY, EUR/CAD, and CHF/JPY have higher spread of 8-17 pips.

Although the majority of forex brokers make their earnings through spread, there are also brokers that charge commission fee per trade. This fee is charged per lot. One lot is 10,000 units of currency; for instance: 10,000 unit are the same with EUR 10,000; GBP 10,000; USD 10,000;etc.

So, do you really need $10,000 so that you can enter forex trading? Not anymore; the current forex trading has solve that problem with leverage system. A 200:1 leverage means that you just need to deposit 10,000 / 200 = $50 to be able to trade 10,000 units or one lot. In other words, if you use a forex broker that charges $40 per lot, you will see $40 missing from your profit each time you trade.

When you choose to use an online forex broker, you will gain access to their online trading platform. These platform will give you access to live price, chart, news, put take profit or stop loss order, execute a trade, and various other resources to support your everyday trading.

Based from various testimonials, not every trader can get used to a particular trading platform, so it is a good idea to test it first in a demo account for at least a week or so. It is advisable to test several trading platforms at once and see which one fit you the best. Another thing that also important is the speed of the order execution.

Create a demo account also has other merit. If you are an experienced trader and possess certain strategies, you should test if the platform supports it or not; for example: hedging.

Hedge a trade is have buy and sell trades in the same currency open simultaneously. This method can be utilized by a trader to lock any loss trades that he has.

Example: a trader buy EUR at 1.4815, then the price dropped to 1.4785. Rather than closing the lose trade, he sell EUR for 1.4785 and thus lock the loss at 30 pips. Then he waits and see the market movements and hopes to avoid loss by closing the two positions at the right price. This strategy is very risky and most traders will just go for the stop loss order.

So here are what to check on an online forex broker:

1. How they gain their compensation; is it through spread? Is it through spread and commission fees? Confirm the spread for your preferable currency pairs and if they charge commission, check the commission rate per lot.

2. Test the trading platform to make sure you are comfortable with the interface, has various resource to support your trades, execute your order in an instant, and the server doesn't down too often.

3. If you have particular strategies that not commonly used, check if the trading platform supports the strategies or not.

4. If you are a forex robot user, check via live chat or email to make sure that they allow it. You can do this easily through the use of the live chat feature. There are several great robots at the market presently and you may decide to utilize one of them at some point, so make sure you take the one that allows it.

5. Verify if they are regulated under an official financial authority like NFA or FSA.

Selecting the right online forex broker doesn't has to be a complicated process; just test their platform and use the live chat feature to ask the rest of the questions.