Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
Before you even start trading, there is one all-important decision you need to make; who is going to be your broker?
A good broker should be just as interested in your success as you by providing you with the tools to succeed. They should make it easy to execute trades and gather profits. But it isn’t always easy choosing a broker. Because there are hundreds of options available, it is easy to stumble across a broker that will hinder your success no matter how skilled you are.
Although choosing a forex broker might seem difficult at first, there are certain factors you can use to decide if a broker is best for you.
We have narrowed down the list to 5 of the most important things you should consider when looking for a brokerage for forex trading.
5 Major Things to Consider When Choosing a Broker
These are the most important factors to consider when choosing a broker:
1. Regulation
The first thing to check when selecting a forex broker is their regulation. Each country has various regulatory bodies that brokers need to be under to ensure that their trading services are free and fair.
Regulated brokers are obligated to protect your capital by keeping it in separate bank accounts from theirs. So, if you happen to trade with an unregulated broker, you are putting your portfolio at risk.
For instance, in the United States, a forex broker must be registered with the Commodity Futures Trading Commission and a member of the National Futures Association.
Just because a website looks well put together, doesn’t mean it can be trusted and you should search out its certification before making any decision.
The About Us section of the website is usually where you can find most of the necessary details about the platform. In addition, look out for any industry awards because it speaks to the credibility of the broker.
2. Account Offerings
Each broker offers different services. The broker you choose should have certain features that set you up for success. These features are:
Commissions and Spreads:
Get to know how your broker makes money and whether or not it impacts your profitability. Some brokers take commissions by charging a specific percentage of the spread while others take no commissions but make their money some other way. To make this easier, you can use the broker spread comparison tool to compare the fees, spreads, and other features of several forex brokers.
Leverage and Margin:
Leverage is perhaps one of the most powerful trading tools because of how beneficial it can be especially in the hands of experienced traders. For instance, you can hold a position valued at $20,000 even if you have a $1000 account.
Most brokers give traders access to leverage in their margin accounts. The amount of leverage offered is determined by the broker and some can offer millions as leverage.
Deposits and Withdrawals:
Forex brokers tend to have very specific deposit and withdrawal policies. Some trading accounts must be funded with $50 or $100 before you can start trading. There are others where the initial deposit starts at $10.
This is why there are different account types such as mini, standard, micro, and managed accounts to suit the needs of individual traders.
For most brokers, you can easily fund your account via credit card, PayPal, wire transfer, and bank checks. The withdrawal process should also be straightforward.
3. Trading Resources
Your broker is essentially your partner and should provide you with the resources to trade with maximum confidence and assurance that you are going to make the right decisions. Look out for these trading resources when choosing a broker:
Trading tools:
It is advisable to find a broker that comes with built-in technical indicators for technical analysis. Some of the most common indicators a website can have are trend lines, moving averages, economic calendar, and the Fibonacci retracement tool.
More advanced platforms tend to come with more tools including an advanced risk management system that allows you to trade with peace of mind.
Educational Resources:
Successful trading means that you have to keep expanding your knowledge of various patterns, strategies, and techniques available in the market. This way, you can keep modifying your strategy until it becomes something you can depend on because it works in different market conditions.
Therefore, a good broker should have a comprehensive blog or educational centre that is regularly updated with sound advice you can use for trading. These educational materials can be articles, books, webinars, and videos.
Some websites even offer live stream sessions with coaches where you can see how they trade and ask pressing questions.
Good Customer Service:
A good broker should be responsive and available to answer your concerns. With a good customer service system, you will never have to worry about account issues disrupting your trade.
Even if you are not someone that uses customer service often, having reliable customer support as and when you need it will make your trading experience more enjoyable.
4. Trading Platforms
Trading platforms are what give you access to the market. This is the place where you buy and trade currency pairs or any other financial instruments you are interested in.
So, the trading platform offered by the broker should be well-designed allowing you to make buy and sell decisions swiftly or even stop one if you open a position in panic. The interface of the trading platform should be nice and easy to use without making you feel overwhelmed.
Brokers may choose to run their trading platforms or offer popular choices like MetaTrader 4 and MetaTrader5.
These two trading platforms are favoured among traders because of their powerful but simple user interface. It is a great choice for both beginners and advanced traders.
Avoid the platforms of unregulated brokers. Even though it looks attractive, these platforms could be manipulated to work against traders. It could initiate stop-losses early or fail to execute the take-profit orders at the required times.
Moreover, it is a good advantage if your trading platform works on both laptops and smartphones without losing any functionality. Before you make your decision, consider other trading features like copy trading and automated trading. These features are especially useful for beginners or anybody who doesn’t want to sit in front of a computer for a long time deciding on trades.
Also determine the presence of other important features like backtesting, strategy building and optimization, and VPS functionality.
5. Reviews
If a broker doesn’t have a single review or seems to be robot generated, it means there is something suspicious about it. Reviews are the best way to know how good a broker is because they are coming directly from the people using them and not the marketing team or otherwise.
Positive reviews show that the broker is a reliable one especially if it has all the other features to look out for. Negative reviews or no reviews at all, shed a negative light on the broker because it might end up being a scam.
Conclusion
You will typically have to check several brokers before landing on the right one. So to make sure that you are making the right choice, compare the pros and cons of all your preferred brokers.
See which one has better features and is more in line with your trading style and goals. Don’t leave any detail to chance because you want to make sure that you can fully trust the firm you are working with. Choosing a broker might be time-consuming, but it is a necessary stepping stone to success in the market.
