The FX market trades over $4 trillion in value each day, which makes it the largest financial market in the world, and since there isn’t a central exchange for Forex, anyone who wants to trade must use a Forex broker in order to place a trade. But how do you choose a broker that’s right for you? With so many brokers competing for your attention through a swarm of internet ads it can be tough to find one that’s reliable and suits your trading needs, so in this article, we’ll look at what needs to be considered when choosing the best Forex broker for you.
First and foremost, a good broker must have strict security. You wouldn’t just give your hard-earned thousands to just anyone, so you need to ensure that you choose a broker who’s going to store your funds in a segregated account.
Also, it’s vital that your broker be regulated by national regulatory bodies to ensure that you’re trading with someone trustworthy. Basically, a country’s regulatory body will provide rules that need to be adhered to in order to protect the integrity of the market and it’s traders from fraud, manipulation. Their aim is to provide open, competitive and financially responsible trading markets.
Brokers make their money through commissions and spreads, and no matter where you look you will always encounter at least some transaction costs. Every time you make a trade you’ll have to either pay for the spread, or pay a commission so it makes sense to look for a broker with an affordable rate.
Although a significant trait that you should take into account, this doesn’t always mean looking for the cheapest broker, security and reliability should always be your priority.
Every broker has their own specific funding and withdrawal practices. Some will allow you to fund with a credit card or PayPal, others will require a bank transfer or BPay. Withdrawals on the other hand are typically bank transfers.
A good Forex broker should have a streamlined process in place that allows you to deposit and withdraw money without any hassle, keeping it speedy and smooth.
With so many different currency pairs on offer, combined with various CFD products such as indices, commodities, you need to make sure your broker provides access to the instruments that you want to trade.
Many brokers offer a vast amount of pairs or instruments to trade on, but for the less liquid assets you may have to take spread into consideration as this can often be quite wide.
This is how you’ll interact with the markets, and as such, you should make sure your broker can offer you access to the platform or software that is reliable and relatively easy to use, depending on your requirements. The platform should be visually pleasing, seeing as you’ll be spending quite a bit of time looking at it and it should offer you a variety of technical and/or fundamental analysis tools as well as making it simple to enter and exit trades.
A poor platform can lead to costly trading mistakes when it comes to order entry in terms of position sizes, opening and closing trades or even choosing which direction you’re placing the trade.
Also, traders need to consider things like whether a platform offers automatic trading, different order types that are required, alerts, and even strategy builders.
Often overlooked, but quite important is your broker’s customer support. Because the FX market runs 24 hours a day, a broker’s support team should be available at any time. Another important factor is how easy it is to speak with a live person instead of a cumbersome automated attendant.
The competence of brokers when dealing with account or technical issues is important, and while they may be helpful during the account opening process, you need to make sure the quality of their support doesn’t wane afterwards.
If you’re able to have confidence in your broker then you can spend more time and attention trading, so some research before you commit to a broker in the long run will make your life easier going forward. I hope this article helps you find the best Forex broker for you.
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