Before choosing a Forex broker, there are 8 important things to consider
What features should you check before selecting a broker:
While choosing the best broker is not an easy task, we offer you 8 features that you should check and compare before selecting a Forex broker and opening an account.
Security and originality of forex brokers
Customer service
Negotiation costs
Easy to lay and lift
Assess the trading platform
Speed and percentage of successful implementation
Trading desk or non-trading desk
Margin and impact
Quality 1: Forex broker security and originality
The main feature that a good broker should have is a high level of security and authenticity. After all, you're not expected to deliver thousands of dollars to someone who claims to be legal, right?Fortunately, assessing the reliability of a Forex broker is not that difficult. We know that Forex retail is a regulated activity in the OTC market. However, according to procedural countries, Forex brokers are often subject to some form of regulation that can help protect the interests of traders.
There are regulatory agencies around the world that can help you distinguish between trustworthy fraud and fraud.
Below is a list of countries with their regulatory authorities:
United States: National Futures Association (NFA) and CFTC
United Kingdom: Financial Enforcement Authority (FCA) and Prudential Regulatory Authority (PRA)
Australia: Australian Securities and Investments Authority (ASIC)
Switzerland: Swiss Federal Banking Commission (SFBC)
Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
France: Autorité des Marchés Financiers (AMF)
Canada: OSFI
India: India Securities and Exchange Council (SEBI)
Even before you consider transferring your money to a Forex broker, make sure the broker is a member of the aforementioned regulators.
For more information, see our beautiful guide to defining Forex scam.
Quality 2: Customer service
Their brokers and trading platforms are not ideal so they should choose a broker to contact you easily in case of a problem.In practice, every broker differs in their customer service style. Some may present themselves as full-service intermediaries providing access to a variety of markets, platforms and merchant services; while others may offer fewer intermediaries and offer only a basic package of services. Some may promise to assign you a dedicated account manager, who will be your direct contact in the event of a problem.
But keep in mind that brokers can be very nice and helpful when opening an account, but they can have tremendous after sales support. Equally important is the broker's effectiveness in dealing with an account or technical issue, such as their negotiation success.
You should open an account with a broker who has a responsible customer service and can answer all your questions or resolve any issues.
Our Tip: Before opening your account, enter some fake customer support phone calls / emails to find out when to answer your questions.
Quality 3: Negotiation costs
Regardless of the type of Forex trader you are, you will always have to pay the transaction fees. Each time you enter an exchange, you must pay the difference in price, exchange, or commission. That is why it is very natural to search for the best and cheapest prices.The trading price varies from broker to broker. Forex brokers often charge commissions in the form of a difference between supply and demand depending on the size depending on the market conditions. However, you should look for medium-range media while retaining the other qualities described in this article.
In addition, some brokers may charge additional trading fees. Fees can be charged on a specific basis for each transaction or can be calculated based on sales volume. You should also check other fees such as inactive costs, use of margins, non-compliance with the minimum bill or even use of special brokerage services offered.
Sometimes it is necessary to sacrifice low transaction rates to select a more reliable broker. It's about striking the right balance between security, services provided and low transaction costs.
Quality 4: Easy to lay and lift
Good Forex brokers give you a seamless deposit and withdrawal experience.Brokers keep your money only to facilitate a smooth trading experience. Therefore there should be no reason
Quality 5: Trading Platform Assessment
In online currency trading, most trading activities take place through the broker's trading platform. This means that the trading platform offered by the broker must be user friendly and stable.Although the features available on these trading platforms vary depending on the type of your account, you should always check the features of the trading platform when choosing a broker. Some common features to check: Do you offer free news or price alerts? Is the technical tool and charts easy to use? Do you have all the information you need to complete the transaction properly?
It is recommended that you look for a demo account that will allow you to test their platforms before trading.
Quality 6: speed and speed of successful implementation
Your broker is required to complete your order quickly and at the best possible price. In normal market conditions (i.e. no major news shows, no sudden events and normal liquidity) there should be no reason for your broker to slow you down or stay close to the market price you see when you click the "Buy" or "Sell" button.For example, if you assume you have a good internet connection, you should get that price or correct points by clicking "buy" EUR / USD for 1.2000. The speed with which your orders are executed, especially if you are an exploiter, is also crucial.
If you are a trader today, a difference of a few points can lead you to lose a business that can be a profitable trade.
Quality 7: Trading desk or not trading desk
Another big difference between brokerage services is whether or not they offer a single sales desk. Some intermediaries offer both.When a broker acts as a trading desk, he will accept the other side of the trader's position to ensure that the trader always has access to the current trading environment. This means that your transaction is executed regardless of global market conditions. Table trading brokers charge fixed margins and also act as counter offers. But sometimes it can also hinder you from making some gains because these orders are executed on a discretionary basis by the broker and do not give you access to the real Forex market.
With each trade on the trading desk, the broker will give you direct access to the price conditions in the internal trading market. This is usually done through an electronic communications network or directly through processing. Although trading without trading space gives you direct access to current market prices, it can also expose you to volatile gaps and slightly weak trading liquidity.
Quality 8: margin and impact
The last thing to consider is the amount of margin and leverage the broker offers.Margin is basically the kind of loan offered by brokers that allows traders to utilize their capital stock. So a good margin means you can trade more than you have in your account.
The amount of margin received depends not only on the brokerage used but also on the type of account you open and the maximum margin allowed in the country where the broker operates. This amount varies greatly from broker to broker. As a result, in some countries you will find brokerages with a maximum impact of up to 50: 1, while others offer up to 400: 1 elsewhere.
How to Choose a Forex Broker - Summary
The wide range of options among Forex brokers makes it difficult for any trader to decide who to trade with. If you follow these 8 basic guidelines, you may be able to choose your best broker.Also keep in mind that the secret to choosing the best broker is to find a balance between all the properties. By choosing a brokerage that complements your trading method, you can reduce your trading costs and increase the efficiency and security of your trading activities.