If you have searched for a forex broker online, you probably know that the ones with the strongest prominence in Google look great. Now comes the challenging part. How do you single out the best one?
You narrow down your options by following a certain set of guidelines. That’s how.
Headquarters Ensure that the company’s location is stated clearly on the website. Avoid forex brokers with an offshore exemption as withdrawal of funds often proves more tedious.
Regulatory Approval Check that your forex broker has one in the country where it is located. Proper regulatory credentials protect your trading capital and discount the possibility of dealing with fly-by-night operators. For example, a US based forex broker would be registered under the FCM while one based in the UK would have an FSA registration.
Type of Account If a forex broker offers you a standard account requiring a minimum deposit of $10,000 and this is beyond your means, then obviously it is of no use to you. So look for brokers that offer many account options. Some can start you up for $100, $200 or even $10 or $25. Choose what feels comfortable. Start small, get comfortable, proceed to a standard account when ready.
Leverage Flexibility in leverage is advantageous. Forex brokers should offer flexible margins. For example, leverages of 100:1 and 400:1 mean that the broker will lend you $100 for every dollar of your own capital and $400 for every dollar of your own capital. So choose a broker that is flexible to suit your trading needs. Leverage is unavoidable as price variation is generally set at a fraction of a cent in forex currencies.
Spreads Spreads are important too. When the markets are stable, a forex broker might give a particular spread that may widen during market volatility. If you are a day trader, opt for a forex broker that offers fixed spreads. But if you are planning to keep your forex positions open for long-term trades, then a few points in spread will have little impact. Don’t assume that all forex brokers offer the same spread.
Platform When considering the trade platform, look for a few things. The platform should feel comfortable and intuitive. Your platform should have speed when opening a trade. When you set an order to be transacted at a certain price, you should have to do this once and not several times before opening a trade. Also, choose platforms that allow you to set a “limit” or “stop” price to a trade. Automatic trade closures will safeguard your trades.
Customer Service Some people forget this aspect when assessing a best forex trader. Don’t be one of them. Accessibility by phone during the hours of Forex activity should be a must. Remember, forex is a 24-hour, 5 days a week market. Write down the telephone number of the support desk in case your PC fails or the internet connection drops. Email and chat are good but not good enough. Telephone access is do-without. Also, multilingual support services are preferable.
Conclusion You have selected a forex broker by wisely taking the above into account. Some considerations remain. If you are a day trader who relies on technicals, do you find your broker’s charting sufficient to execute profitable trades? If you rely on fundamental analysis, does your broker provide you the “breaking news” on economic data releases? In other words, does this broker match your trading style? Ultimately, how you execute your trade is your decision. Choose a broker that not only meets the above guidelines but that also matches your trading style.
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