The Forex market is so large that the prospect of having to scroll through all of the available brokers can be overwhelming. Choosing a forex broker to trade with can be a challenging job, particularly if you are unfamiliar with what to look for.
In this guide, we are going to discuss how to choose a forex broker by following six simple steps.
1. Regulations
The first and most important quality of a successful broker is a high standard of security. After all, you wouldn’t hand over thousands of dollars to someone who actually claims to be legitimate, would you?
Fortunately, assessing a forex broker’s reputation is not difficult. Regulatory bodies work all over the world to distinguish the honest from the deceptive.
The most reputable regulatory bodies are ASIC (Australian Securities and Investments Commission), FCA (Financial Conduct Authority), FSCA (Financial Sector and Conduct Authority), and CySEC (Cyprus Securities and Exchange Commission). Hence, you should choose a regulated Forex broker in order to start forex trading and keep your funds safe when trading the Forex market. FXCC Forex Broker and Plus500 (a multi-regulated CFD Broker) are examples of a CySEC regulated entities.
2. Transactions Cost
Whether you like it or not, you will still be exposed to transaction costs as a currency trader.
Any time you enter a trade, you’ll have to pay either a spread or a fee, so it’s only reasonable to look for the most cost-effective options.
You may need to make a trade-off between low transaction volume and a more dependable broker at times.
See if you need tight spreads for your trading style, and then consider your options. It all comes down to striking the right balance between security and transaction costs.
3. Trading platform
Most of the forex trading takes place on the brokers’ trading platform. This means that your broker’s trading platform must be user-friendly and secure.
Often check what a broker’s trading platform has to offer while looking for a broker.
4. Education
Look for a section on the website assigned to education, which includes webinars and tutorials on the fundamentals of forex markets, common currency pairs, and market forces that cause buying or selling pressure.
These articles should provide specific details on how central banks influence currency markets when they increase or lower interest rates and how traders should plan for these periodic events.
5. Execution
It is required that your broker fills your orders at the best possible price.
There is no reason for your broker to not fill you at, or very close to, the market price you see when you press the “buy” or “sell” button under normal market conditions.
6. Deposits and withdrawals
Good Forex brokers will make it simple for you to deposit funds and withdraw your profits.
7. Customer service
Since brokers aren’t flawless, you should choose one with whom you can easily communicate if problems arise.
Choosing a Forex Broker Summary
When looking for a Forex broker, take your time because a poor decision can be costly. Top brokers would have a wealth of capital, low trading fees, and access to the global interbank system.
Even if you open a small account in the hopes of turning it into a small fortune with your trading skills, they’ll treat your money with care.