The retail forex market is so competitive that the thought of having to sift through all of the available brokers can be daunting.
Choosing a forex broker to trade with can be a daunting job, particularly if you are unfamiliar with what to look for.
We’ll go over the attributes you should look for in a forex broker in this segment.
The first and most important quality of a successful broker is a high standard of security. After all, you wouldn’t hand over thousands of dollars to someone who actually claims to be legitimate, would you?
Fortunately, assessing a forex broker’s reputation is not difficult. Regulatory bodies exist all over the world to distinguish the honest from the dishonest.
Below is a list of countries with their corresponding regulatory bodies:
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
- Australia: Australian Securities and Investment Commission (ASIC)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- France: Autorité des Marchés Financiers (AMF)
- Canada: Investment Information Regulatory Organization of Canada (IIROC)
Before you even consider investing in a broker, make sure that the broker is a member of one of the regulatory bodies mentioned above.
2. Transaction Costs
Whether you like it or not, you will still be exposed to transaction costs as a currency trader.
Any time you enter a trade, you’ll have to pay either a spread or a fee, so it’s only reasonable to look for the most cost-effective options.
You may need to make a trade-off between low transaction volume and a more dependable broker at times.
Check to see if you need tight spreads for your trading style, and then consider your options. It all comes down to striking the right balance between security and transaction costs.
3. Deposit and Withdrawal
Good forex brokers will make it simple for you to deposit funds and withdraw your profits.
Brokers have no excuse to make it difficult for you to withdraw your profits because the only reason they keep your money is to make trading easier.
Your broker just keeps your money to make trading easier, so there’s no excuse why you shouldn’t be able to get your income. The withdrawal process should be fast and painless, according to your broker.
4. Trading Platform
The majority of trading operations in online forex trading takes place on the brokers’ trading platform. This means that your broker’s trading platform must be user-friendly and secure.
Often check what a broker’s trading platform has to offer while searching for a broker.
Is there a free news feed available? What about technological and charting methods that are simple to use? Does it present you with all the information you will need to trade properly?
It is mandatory that your broker fills you at the best possible price for your orders.
There is no excuse for your broker not to fill you at, or very close to, the market price you see when you press the “buy” or “sell” button under normal market conditions (e.g., normal liquidity, no significant news releases or surprise events).
If you press “buy” EUR/USD for 1.3000, for example, and you have a secure internet connection, you should get filled at that price or within micro-pips of it. If you’re a scalper, the pace at which your orders are fulfilled is critical.
A few pips difference in price can make that much harder on you to win that trade.
6. Customer Service
Brokers aren’t perfect, and therefore you must pick a broker that you could easily contact when problems arise.
The competence of brokers when dealing with account or technical support issues is just as important as their performance on executing trades.
Although forex brokers can be courteous and helpful during the account opening process, they provide poor “after-sales” service.
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