All major forex brokers have websites that look impressive. The question is, how do you use that information provided online to select 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.
Location Make sure that the company’s heardquarters are explicitly stated on the website. Withdrawing money from a forex broker that is offshore based might prove more difficult. So exclude those.
Registration Your broker should be registered with the regulatory authority of the country where it is based. In the UK, it should be registered under the FSA. In the United States it would have an FCM registration. Proper regulatory credentials ensure that your trading capital is safer and discount the possibility of fly-by-night operators.
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 Brokers should offer you flexible margins. If a forex broker offers a leverage of 100:1 or 400:1, this means that the broker will lend you $100 for every $1 of your capital and $400 for every dollar of your capital, respectively. Leverage is unavoidable as price deviation is typically set at a fraction of a cent in forex currencies.
Spreads Spreads are important too. When the markets are stable, a forex broker might provide 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 The platform is the environment where you will be executing your trades. Make sure you like the interface. First, try a demo and then ask the broker if it corresponds to the real version. Avoid platforms that don’t have speed when opening a trade. When you set an order to be transacted at a certain price, you want to do it once, not several times before opening a trade. Also, pick platforms that have automatic trade closure. You need to be able to set a “limit” or “stop” price as this safeguards 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.