Things to Consider When Choosing the Right Forex Broker
Trading at forex market is so competitive that just choosing the right broker to make a safe career can give you a major headache.
Choosing the right forex broker to trade with can be so difficult task especially if you do not understand which things you should consider while picking the broker.
In this article, we will discuss the features you should look for when choosing a broker.
The first and foremost feature that a good broker must offer is a high level of security. After all, you are not going to deposit thousands of dollars with a broker that just claims it is reliable, right?
However, checking the security issues of a forex broker is not very difficult. There are many regulatory authorities that help you to separate the trustworthy from the fraudulent. The job of the regulatory authorities is to confirm the economic strength of the broker and the reliability towards the traders.
Below is a list of countries with their dedicated regulatory authorities:
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- Australia: Australian Securities and Investment Commission (ASIC)
- Canada: Financial Markets Authority (AMF)
- Germany: The Federal Financial Supervisory Authority (BaFin)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- France: Financial Markets Authority (AMF)
Before even THINKING of handing over your money to a broker, make sure that the broker is authorized by any of these regulatory bodies mentioned above.
- Transaction Cost
No matter what type of trader you are, love it or not, you will always have to career a transaction costs while trading.
Every time you execute a trade, you will have to carry the charge of either the forex spread or a commission. Therefore, it is better to look for the broker that offers most affordable and cheapest rates. However, sometimes you may need to sacrifice low transaction for a more trustworthy broker.
- Deposit and Withdrawal
Good forex brokers will normally allow you to deposit funds and withdraw your profits without any difficulties. Brokers really have no reason to hold your funds and make it hard for you to withdraw your profits. Good broker should confirm that the withdrawal process is fast and hassle-free.
- Trading Platform
In online forex trading, most trading activity happens through the brokers’ trading platform. So, in order to trade profitably, the trading platform of your chosen broker has to be easy to use and stable.
While choosing the right broker for you, always check what its trading platform has to offer. Does it offer free news feed? How about accessible technical and charting tools? Does it bring you with all the information you will need to trade profitably?
It is important that your broker fill you in the best possible price for your orders.
Under normal market conditions (e.g. normal liquidity, no important news releases or surprise events), there really is no reason for your broker to not fill you at, or very close to, the market price you see when you click the “buy” or “sell” button. Because, a few pips difference in price can make that much harder on you to win that trade.
- Customer Service
No broker is perfect, hence you must choose a broker that you could easily get support when problems arise.
The capability of brokers when dealing with account or technical support issues is just as crucial as their performance on executing trades. Brokers might be so kind and supportive during the account opening and funds depositing time, but have awful ‘after sales’ support.