We are living in a digital era, where it has become easy to access the internet. For those who want to invest through forex trading, it has become easy due to internet availability. With the benefits of improved technology, there are downsides to the investment industry. Many scams have been developed in the market, and most people are losing their money in different ways. One of the ways you can lose money is through an unreliable forex broker.
With many forex brokers in the market, choosing a reliable broker is a hassle. To ease your process, check for trusted brokers reviews here. It will help you make an informed decision. If you are choosing a forex broker for the first time, it may seem challenging – although it simple. Your priority should be based on the safety of your money. So, the forex broker should be genuine and trustworthy and can’t steal your hard-earned money.
You can avoid all inconveniences by choosing a reliable broker who is regulated by financial bodies. The broker also has to operate honestly, and in any case, the broker goes bankrupt, you can recover your deposit. So, to ensure your money is safe, only deal with forex brokers whose regulatory bodies guarantee you deposit protection. In other words, even after the broker becomes broke, the government can bail you out by paying your funds to a specific amount – although that may take some time.
Try to look for a broker known to have a good reputation and healthy financial situation. Once you consider the above precaution, you are now ready to see what your potential broker offers: an asset to trade, overnight financing charges, spread and commissions, speed, and reliability to make a choice.
Let’s get started:
1. Consider Your Personal Needs
It is excellent to get a reliable broker, but before that, you have to decide what you want to trade. Also, you have to evaluate whether you wish to trade a little or a lot.
If you are for day traders and capture small moves, an ECN broker may be an excellent option. With such a broker, you are needed to pay a commission, but in returns, you expect tighter spreads.
On the other hand, if you know that an ECN broker is not the right for you, the market has numerous brokers you can pick.
The other determinant will be the capital you want to invest. It would help if you started with micro-lots when you don’t have money. If you’re going to trade over $5,000, begin to trade mini-slots.
Lastly, another determinant is the account you want. Choose a broker depending on your budget and the amount you wish to trade.
2. Availability Of Trading Education And Tools
A reputable forex broker should offer you a variety of reading materials to educate yourself. This is because a good client should make you smarter to improve your trading skills.
Most trading information should be included in a broker’s platform. With detailed information, you can learn how central banks will affect the currency markets – especially on raising and lowering interest rates. This helps you become more prepared for such periodic events.
Additionally, on the educational section, it should also have instructions on currency pairs, broker’s trading platform, and market orders. You have to search for manuals, tutorials, and videos to enable you to know that you can build a customized watchlist, display reading quote screens, and set up technical charts. Moreover, instructional materials have to explain how you can access news and research adequately from platforms, thus not wasting time looking for information.
The platform should have economic analysis tools and extensive research materials that help one to understand currency pairs. This may lead you to form a short term profit opportunity.
Additionally, this section offers you commentary and insight from real-time news, live webinars, and industry experts.
Security is a must factor to consider when looking for a broker. A good broker should provide you with an extensive level of protection. There is no need for you to hand over your hard-earned money to a broker that claims legit.
An advantage is that checking credibility for any forex broker is not a hassle. Each country has regulatory agencies that help you separate a fraudulent from a trustworthy broker.
Depending on your country or region, these are regulatory bodies to check:
United States: The Commodity Futures Trading Commission & the National Futures Association.
United Kingdom: Prudential Regulatory Authority & Financial Conduct Authority
Australia:Australia Securities & Investment Commission
Switzerland: Swiss Federal Banking Commission
France: Autorité des Marchés Financiers
Germany: Bundesanstalt für Finanzdienstleistungsaufsicht
Canada: Investment Information Regulatory Organization of Canada
A secure way not to lose your money is when the broker becomes a member of these regulatory bodies.
4. Deposit and Withdrawal
For most forex brokers, depositing your money is easy, but hard to withdraw your profits. A good broker is one that offers you a hassle-free withdrawal of your earnings.
There is no specific reason for a broker to make it hard for you when you want to withdraw profits. The only reason for a broker to hold your money is when facilitating trade.
A broker should hold money for you to have smooth trading. There should be no other reason to keep your money. A good forex broker ensures you get a smooth and fast withdrawal process.
5. Transaction Costs
Your currency is not necessary here; that is because you will be subjected to a transaction cost. Any time you will trade, there are charges to pay: commission or spread fee. Therefore, a good broker is one that offers the cheapest and affordable rates.
There are times you have to sacrifice the low transactions and look for a reliable broker. It will help you know whether you need tight spreads for a specific kind of trade, enabling you to review available options.
The important thing is to find the correct balance forex broker between low transaction costs and security.
6. Trading Platform
When dealing with online trading, it will be possible to do it at your broker’s trading platform. You, therefore, have to choose a broker that offers you a stable and user-friendly trading platform.
The usability of a trading platform is essential for a broker. So, always consider what the broker has to offer you before you make a decision.
Some other services a broker can offer you include a free news feed, trading information, charting, and trading tools.
7. Trade Execution
A good broker should fill you with the best possible price when trading. When the market condition is normal such as no recent surprise events, news release, or normal liquidity, there should be no reason for a broker not to fill you with the current market price or close to that. You can see the moment you click the “sell” or “buy” button.
For example, with a stable internet connection, after clicking buy EUR/USD of 1.3000, the broker should fill within micro-pips of the price or that specific price. The speed at which your orders will be filled is also essential – especially when you know you are a scalper.
With a difference in a few pips becomes more challenging for you to win the trade.
8. Customer Service
The market has no perfect broker, but reliability is essential for a broker. Some reasons make you contact a broker when a problem arises.
A competent broker is essential to deal with when you need assistance with your account or technical support problems. You will find that most forex brokers help open an account but will have terrible “after-sales” support.
The Bottom Line
Don’t be in a hurry to pick a forex broker. This is because any mistake you make of choosing the wrong broker can be costly. Top brokers offer you vital resources, access to the interbank system, and low trading costs.
Additionally, they can handle your money with much care even after opening an account, hoping it will give you a fortune by learning trading skills.
Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.