Various Forex trading strategies have different objectives. Those who eschew Technical Analysis rely upon fundamental analysis and macro-economic acumen in order to accurately predict future currency movements based upon a nation’s economic and political policies. The most famous Forex trade predicated on this strategy type was when George Soros “broke the Bank of England” by heavily shorting the British Pound. His ability to correctly analyze the nuances of the British economy at the time allowed for what some would term obscene profits.

Those who employ Forex trading strategies based upon Fundamental Analysis must be constantly attuned to the economic and political policies of the major nations of the world. Furthermore, they must be of a patient mindset, willing to hold positions for a long duration while waiting for their thesis to play out. Most Forex traders seek quicker profits and must turn to Technical Analysis to formulate their Forex strategies.  Fundamental Analysis cannot predict moment-to-moment volatility.

Technical Analysis seeks to identify what short-term traders are most apt to do in the near-term future. Technical Analysis combines math with psychology and attempts to predict the behavior of crowds. In essence, the Forex market is a large crowd that consequently exhibits behaviors that have been quantified by research conducted by sociologists and psychologists. Technical Analysis involves the ability to quickly read and recognize chart patterns, which serve as signals to either buy or sell a given currency.

Several decades ago, large institutional Forex trading firms decided to employ a large staff of PhD’s to develop and run sophisticated software, which served to constantly analyze both technical indicators as well as fundamental developments. This endeavor cost millions of dollars and was available only to the highest net-worth investors. Over the course of time, the expense of these sophisticated Forex trading software programs has come way down. The best of these software packages, even including names like <product>, are now well within the reach of even the smallest trader.

Forex trading has a diverse range of benefits and can be educational as well as lucrative. By following the various domestic and international events that drive the value of your Forex positions you become a more knowledgeable and worldly individual. Adding a good Forex trading software to the mix prevents you from having to stay glued to the computer screen hour-after-hour; you devise the strategy and let the Forex trading software do the grunt work. The availability of sophisticated software and the convenience of the Internet have created a prime time for individual Forex warriors.

The first criterion relates to trustworthiness. Unfortunately, fraud has been known to happen within the currency trading arena. It is imperative that you protect yourself from unscrupulous and fly-by-night operators within the Forex realm. Several Forex brokers have long track records and are subject to the stringent regulations found in North America and the EU.

Examples of highly regulated Forex brokers with long histories and reputations include Interactive Brokers (which, as a U.S. publicly traded company, has even additional layers of regulation), MG Forex, Oanda, and MB Trading. Although it is impossible to paint all Forex brokers in a given category with a broad brush, it is prudent to avoid Forex brokers domiciled in locales associated with weak regulation such as Cypress.

The next facet that must be reviewed is the minimum account balance required. This can range from just $1 to open an account with Oanda all the way to a $50,000 minimum balance needed to open a higher end account with Duckascopy Swiss. You often will find that accounts with a higher required minimum balance charge less fees via the spread.

Another important criterion to review is the amount of leverage that a given Forex broker will allow you. Increased leverage allows you to greatly amplify your return on invested capital; however, it can also exacerbate losses when a given position goes against you.  Conservative Forex brokers such as Interactive Brokers limit your leverage to the 50:1 range.  Forex brokers, which allow you to more aggressively employ leverage, include FXCM and CMS Forex, which permit up to 400:1 leverage.

The next important factor is what is termed the “spread.”  Larger spreads insidiously detract from your profits in a subtle fashion, and many traders never realize how much is being lost to them. You should ideally have a Forex broker with spreads in the 1-3 pip range for major currencies. Forex brokers with spreads which go beyond this range can be considered among the “bad guys.”

Finally, you should select a Forex broker with a good reputation for providing a high level of customer service and support. Forex brokers that consistently rate at the top of customer satisfaction surveys include Interactive Brokers, MIG investments, and Varengold Bank.

When it comes time for you to begin your exciting journey into the currency markets, do not make the mistake of just opening an account at the first Forex broker that catches your eye. Make sure you scrutinize all the applicable terms and conditions as referenced above. Selecting one of the “good guy” Forex brokers is a critical first step toward your future Forex trading success.