All major forex brokers have websites that look professional. The question is, how do you use that information provided online to choose the forex broker that is most suited to your needs?
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 complicated.
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.
Account Type Look for forex brokers that offer a wide choice of accounts so that you can start with what you can afford. If the standard account requires a minimum deposit of $2000 but you can’t afford this, then it is no use to you. Choose a broker that can start you up with $100, $200 or whatever feels comfortable. Some brokers even offer micro-accounts for $10 or $25. As a rule, start small, get comfortable, then proceed to a standard account.
Leverage Choose brokers that give you choice in leverage. Such a broker can offer you flexible margins. Leverage is inevitable as price deviation is usually set at a fraction of a cent in forex currencies. 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, respectively. Leverage flexibility is preferable.
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 Suppose that you have chosen a forex broker using the above criteria as you should. The question is, are you compatible with this broker? Does this broker suit your trading style? If you are a day trader who relies on technicals, do you find your broker’s technical analysis sufficient to execute profitable trades? Or, if you are a trader who relies on fundamental analysis, does your broker supply you with “breaking news” on vital economic data releases? In conclusion, choose a broker that suits your trading style but who nevertheless falls within the guidelines recommended above.
Check out my review with the best forex trader and find out more what a beginner can expect with the Forex Yard broker.