Top Things to Keep in Mind When Selecting a Forex Broker
If you are here, then you are probably thinking about entering into forex trading. Forex or foreign currency trading is gaining immense popularity as one of the amazing ways to bang some extra bucks. However, it is not an easy task and not something that you can do without possessing a thorough understanding of the rules that come with it. Hence, you require hiring a professional broker who can explain the process and make good and advantageous trading calls for you. Therefore, you can understand how critical it is that you select the right forex broker before jumping into the relative market.
Selecting a forex broker is a tedious task as there are a ton of them available. Going through each one of them and determining who will be the best for you is an arduous and demanding task. To help you in the process, we are providing below some primary factors that you must keep in your mind when selecting an online forex broker.
How to Select a Perfect Forex Broker for you?
Steering Clear of Fraudulent Forex Brokers
You cannot decide on a forex broker based on the claims made by him solely. As mentioned in the beginning, there are significant numbers of brokers available in the relative market and the number is increasing every day. There do exist fraudulent namesake brokers who will simply rip you off of your hard-earned money. Fortunately, it is easy to check whether a broker is regulated or not. Regulatory agencies like NFA, CFTC in the USA, PRA in the UK, and more are present all over the world to tell you whether the forex broker you are looking to hire is trustworthy or not.
This should be your first check before keeping money that the broker is listed under these regulatory bodies.
Upon selecting a forex broker, you require opening an account with them. For this, you, indeed, require sharing your personal as well as financial information like your bank account, credit cards, bills, and more. Cases of identity theft and financial information getting leaked are common nowadays. Hence, make sure that the broker implements state-of-the-art security features to prevent any kind of data breach.
Hassle-Free Deposit & Withdrawal Process
Of course, you require withdrawing money to your bank account after registering profits. Hence, before selecting a forex broker, go through their deposit and withdrawal process. Usually, the deposit process will be smooth, however, there could be certain conditions levied on withdrawal. If you are seeing that the withdrawal process comes with a list of conditions, then it is best to steer clear of that broker. After all, it is your money and the broker only exists to help you in making the right trading calls. If a broker is holding onto your money it could mean that he is using your money somewhere else without your knowledge.
Cost of the Transaction
Transaction costs always come with any trading call that you will make. Some brokers charge a fixed cost while others may ask for a small percentage of the profit that you will register. Hence, it is advisable to check and agree upon the transaction costs before finalizing the broker. Of course, it is the human tendency to look for the cheapest rates and you will be able to locate the same as well. However, please keep in mind that dependable brokers usually have higher transaction costs as compared to others. Therefore, your target is to find the right mix between transaction costs, security, reliability, and experience.
Even if you pick the most reliable broker available out there, problems do arise in terms of technical glitches, account-related support, and more. Hence, make sure that the broker which you are selecting, apart from having the knowledge and expertise in forex trading, is competent enough to help you deal with any technical issues as this could have a significant impact on your trading execution. This is important to consider as just like any other market, you can easily land up with brokers that are ultra-kind and supportive during the on-boarding process but have horrible customer service.
Currency Pairs you plan to trade-in
The usual currency pairs for trading are offered by every broker. However, there are currency pairs that are not that active in the trading scene. If you plan to trade in any such currency pair, then you must check with the broker whether they are offering you the same or not. Please note that though brokers will acknowledge your request of trading in a less active currency pair, you might have to pay more in transaction costs for them.
Execution of Trade
Of course, the timing of calling a trade holds a ton of significance in forex trading and even a difference of few seconds can decide whether you are registering a loss or a profit. The forex market is extremely volatile and there can be changes in an instant. Hence, your broker must be able to act effectively and promptly to call in the trade when it is the most profitable for you. Please note that there are brokers who are market makers and can call in the trade instantly. However, some brokers have to pass the trading order through an interbank system which usually works slowly as compared to the brokers who can instantly react to the changes in the market. Hence, trade execution is one of the important factors to keep in mind while selecting an online forex broker.
Availability of Demo Account
The trading platform employed by the forex broker must be user-friendly and should be packed with features that are required to meet the trading requirements of the customer. Check whether the broker you are selecting is offering the facility of a demo account or not. It is a good idea to go through and try the demo account before signing up for an actual forex trading account with the broker.
These are the primary things that you must keep in mind before finalizing a forex broker for yourself. Feel free to put down any further questions that might be popping up in your mind in the comments section provided below.