How to Choose the Best Forex Broker
hoosing the best Forex Broker is constituted by numerous elements. This short feature aims to give you, the novice trader, an idea as to what specific qualities you need to look into when deciding on a Broker.
Here, we will be briefly discussing six (6) important aspects that a Broker should excel at, namely: Security, Fund Deposit and Withdrawal, Transaction Costs, Trading Platform, Execution, and Customer Service.
6 Crucial Things to Consider When Choosing a Forex Broker
1. Tight Security
Somewhat a matter of common sense, the first thing that you have to consider in getting a good Broker is its promise of high-level security.
Beginners in the trading game are fortunate as checking for a Broker’s credibility isn’t much of a challenge. Regulatory agencies across the globe are privy on the sneaky and the fraudulent and they are more than willing to share the information.
Here is a list of countries and their regulatory bodies:
Australia: Australian Securities and Investment Commission (ASIC)
Canada: Investment Information Regulatory Organization of Canada (IIROC)
France: Autorité des Marchés Financiers (AMF)
Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
Switzerland: Swiss Federal Banking Commission (SFBC)
United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
It would be wise to check if the Broker is a member of any of these regulatory boards. If it is, it is highly likely that the Brokerage company is a legitimate one.
2. Affordable Transaction Costs
Transaction Costs are an inevitability regardless of what kind of currency trader you are.
Entering a trade means paying for either the spread or a commission. As this is the case, it is natural and important for the trader to look for the cheapest or the most affordable rates.
Not uncommon is the measure that sacrifices low transactions for Broker reliability.
You have to be on top of all specifics; you will have to determine if you need tight spreads and afterwards review existing options. You need to balance security and low transaction costs.
3. Easy Deposit and Withdrawal
Reliable Forex Brokerage companies are lax with depositing funds and withdrawal of earnings.
Fact of the matter is, Brokers need not make withdrawals of your profits difficult. Brokers only hold your funds in light of trading facilitation. Actually, it is well within the responsibility of your broker to ensure speedy and smooth withdrawal processes.
4. Intuitive and Comprehensive Trading Platform Functions
As most trading activity happens through the broker’s trading platform in online Forex trading, it should be intuitive and stable.
As such, it is imperative that when you look for a trading platform, look into its tools, its key strengths. Check if its technical and charting tools are easy enough to use. Does it have a news feed? Are all relevant information for sound trading made available to you? You have to take note of these as the capabilities of the trading platform you would be able to determine are decisive to how your trading activities would be conducted.
It is well within your broker’s responsibilities to fill you at the best possible price for your orders.
Normal market conditions, (meaning normal liquidity, no important news releases or surprise market events) means your broker should be filling you at, or very close to, the market price visible to you upon clicking “buy” or “sell”.
For instance, provided your internet connection is stable, upon clicking “buy” EUR/USD for 1.2000, that would be the price you would get filled for or at least within the micro-pips of it. The speed at which your orders get filled is integral, more so if you’re a scalper.
A few pips difference in price can make or break your deal.
6. Competent Customer Service
Should problems arise, it would be a comfort to traders to be given support readily. As such, a competent broker is also measured by the efficiency of its customer support system.
Brokers should not only be forthcoming during the account opening process, they should also be approachable during “post sales”.