One question that has proven quite popular and vital to those wishing to trade forex is how to choose what forex broker to go with. It’s a question that brokers know is popular, and the rise in the popularity of trading, in general, has seen a significant increase in demand for brokers. Because of this, a person who begins looking for a forex broker will often be bombarded with many options.
Online forex brokers are constantly on the lookout for new business. If you haven’t already, you can be sure you’ll run into a few well-placed advertisements on various forex and financial websites trying to convince you to select them as your broker. This constant barrage of options can be overwhelming, and the best way to avoid getting to that place of overwhelm is by learning what to look for in a broker.
Here are some helpful ways to identify the best forex broker for you.
Are They Licensed and Regulated?
Your money is essential, and your trust in a broker is significant. It’s for this reason that the first thing you ought to do as a new trader is to seek out a forex broker that is licensed and regulated. This means that should anything go wrong, you have a safety net in the form of a regulator to make sure you’re being treated fairly and legally.
Every country has its own regulatory body, so check which country the broker is operating in and confirm that they are members of that body. Some examples of these bodies are the Financial Conduct Authority (FCA) in the UK, the National Futures Association (NFA) in America, and the Australian Securities and Investments Commission (ASIC) in Australia.
Account Features
Every broker is unique when it comes to their account offerings. You have to consider a couple of things when looking at what a forex broker offers and the types of services they deal in. Most importantly, you should look at the commission and spread options of different brokers because how your broker makes its money will impact the way you trade with them.
It is crucial to know the fee structures of brokers before selecting any kind of broker. You should know what you can expect to be paying on what kind of trades. A broker might not charge any commission on your trades, but they might have higher spreads. Conversely, a broker may offer lower spreads (which are better for traders) but charge a separate commission on trades. All of these points are valuable to find out before choosing who to go with.
The amount of leverage made available by a broker is also noteworthy information for new traders. The higher the leverage you are trying to trade with, the greater the risk. Be cautious when using leverage.
Customer Service
There’s nothing worse than needing help with something related to your trading account or platform and not being able to reach anybody. Your money is on the line, and you need assistance! This is where it’s crucial to ensure a broker’s availability and ease of access are accommodating for you. Trading never sleeps, so your broker should be on hand whenever you need them. Be sure to check if you can reach someone on the phone, and note how long your wait time is. This can help you decide which broker best fits your trading times and needs.
What Markets Do They Have Available?
While forex trading deals primarily with currency pairs, it can help to have other options available should opportunities arise in other markets. It will be frustrating if you spot an opportunity in another market but can’t take advantage of it because your broker doesn’t offer it.
Markets such as cryptocurrency or the stock market are constantly rising and falling, with successful traders dabbling in both as well as in currencies. You don’t want to be in a position where you miss a cryptocurrency boom!
A broker that offers access to all these markets, as well as commodities, can be a major benefit to you.
Trading Platform
A trading platform is your first gateway to the markets in which you’re going to trade, so they’re very important. Most brokers offer their traders access to their independent platforms, in which case you must know that the trading tools you’ll need will be available and the general user interface is simple and easy to navigate. The last thing you need when trading online is a trading platform that is riddled with issues and slow performance.
Conclusion
Learning how to choose the right forex broker for you is an important skill to have because of the craziness of the market. When you know what kind of forex broker you’re seeking, it becomes easier to ignore the rest of the noise trying to get your attention.