With so much loss in the stock market in the past several years, more people than ever are looking into trading in the foreign exchange (forex) market. They share a lot in common, including the the fact that a broker is needed to help you buy and sell. So one of the first things you will need to do is learn how to choose a forex broker.

In the forex, instead of having choices of ten of thousands of potential investments, (as in stock trading), the only things being traded are international currencies. There are only 14 main currencies that dominate forex. Every trade involves pitting one currency up against another. Since the number of possible trades are so relatively limited, a lot of people think it is easy to make money.

That mindset, more than any other, is responsible for massive numbers of forex traders losing everything. Is it that mindset that some rather unsavory forex brokers exploit in their unwitting customers.

Just as with the trading of stocks or commodities, the broker makes her money from you, no matter if you win or lose. Many brokers find it in their favor to encourage trading, when you should not be making any at the moment.

As you are searching for a forex broker, when you read their brochures or online literature, and as you speak to them on the phone, what is the tone of their message? Do they seem to be enticing people into believing that they can start from scratch with limited funds and no experience and do very well in the foreign exchange market in a short amount of time? Stay away from those.

Or, on the other hand, do they inform their prospects that the foreign exchange market is a zero sum situation, which means, someone can only make money if someone else loses money? Do they let you know that the whole thing favors big banks and other high rollers? Do they tell you that the only investments you should be making in forex is money that you can afford to say goodbye to? Once you have learned how to choose a forex broker, you will realize that is the exact the type that you want to get.

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