Are you ready to start trading forex? If so, you would need to find yourself a reliable ‘Forex Broker’.
A Forex broker is a company or firm that provides traders with access to a trading platform to buy and sell foreign currencies. But not every broker are the same.
To trade successfully you need to trade with a broker that is not just safe but will also let you withdraw (on time) any profits that you make.
10 Things to Look in a Forex Broker
There are so many brokers out there that finding a reliable Forex broker that is good for you is extremely hard. But we break it down for you into 10 points checklist that you must follow while choosing a forex broker.
Almost all Forex traders will tell you about encounters with dishonest and non-transparent brokers, and there are 100s such bad brokers. So how do you avoid them?
This is where the regulation comes into place.
A regulated broker not only keeps your funds secure but also maintains fair dealing practices so that your trades are executed at the current market prices without any manipulation. So start by checking whether the broker that is regulated or not.
2. Experience of Other traders
Before choosing any broker, it is worthwhile to actively check reviews by other traders who have already used the platforms of broker that you are about to choose.
If you know a friend or family that is already into trading, then it is worth asking them for their experience. You should also look for threads about any good or bad experiences of traders on Nairaland, or quickly scan the reviews on Forextrading.ng (Nigerian broker comparison website) for the forex broker that you are about to choose. Another resource worth checking is ForexFactory.com where you can find experiences by traders from all over the world.
You are likely to find both positive and negative reviews for all brokers. But unless the information comes from a credible source, you should not trust it easily.
3. Safety of your funds
When depositing funds to a broker, you should make sure that your funds will be both safe and accessible to you any time you request a withdrawal. It’s best to choose that broker that has a history & has been around for some time.
Also, check the broker’s about page to find out what sort of technology it uses to keep your accounts safe. Always check if the deposited funds are segregated in accordance with strict policies and procedures set by Regulatory bodies.
4. Trading platform
Choosing the right trading platform is almost indispensable. The right broker’s trading platform will allow you to place an order or close a trade promptly without any requotes.
It’s best to choose brokers that offer Metatrader platform since you will have the charting tools for technical analysis.
Also, check if your broker offers instant execution or not. A good broker’s platform will be reliable enough to avoid frequent freezing or system crashes, which are most likely to occur during worldwide breaking news or events.
5. Spreads, commissions, and fees
Spreads are the primary sources of compensation for a broker. Brokers charge either fixed or floating spread on every trade. A fixed spread is a set number of pips (percentage in point) between the buy and sells rate, whereas a floating spread varies with market conditions. The lower the spread the less costly it is for you to enter or exit a trade.
Choose a broker that offers the lowest spread. Also, check whether your forex brokers charges any commissions or extra fees during withdrawals, deposits, transfers, account closure, etc.
6. Deposits and withdrawals
Choose a Forex broker that will not just help you deposit funds hassle-free but also lets you withdraw your earnings freely and without restrictions. If the broker has various options for deposits and withdrawals, it is a good sign as it makes the funds easily transferrable. Before you register with a particular broker, don’t forget to ask about the deposit and withdrawal fees.
7. Trade execution
Execution speed defines whether you’ll be making profits or enduring losses on your trade. While clicking the buy or sell button, even a delay of a few seconds can cost you big.
If you wish to get your trades filled at the best rates and in a timely manner, find a Forex broker that offers fast trade execution without any rejections. Ask the broker about their execution policy & if they offer real-time data and near-instant execution or not.
8. Account offerings
Before you sign up with any broker, it is advisable to check the type of accounts offered & the trading instruments available to you for trading. Not every account will suit your level of trading experience and funding requirements.
Typically, there are 2 types of accounts offered by a Forex broker: Standard & ECN accounts, all with different initial deposits and trading conditions. Check which account is best for your needs & only then make your decision. As a rule, ensure that your broker has all the attributes, benefits and the platform you require for trading multiple currency pairs.
9. Customer service
Choose the broker who offers round the clock assistance since trading occurs 24 hours a day. Ensure the broker is reachable via various media including phone, live-chat or email, and is capable of answering all your questions.
Whether you are new to the financial instruments market or an experienced trader, test the broker’s support (while using demo) to judge whether they are knowledgeable enough to answer your questions quickly.
A broker’s website represents its image. A well-designed and professional website with easily accessible necessary information is good.
Always pay attention to the broker’s website as it should have clear About, Regulation & Support pages.
Be aware that every broker’s website mostly consists of sales pitch aimed at attracting new customers. Don’t be lured by phony promises that may assure an insane amount of profits and a free unlimited income potential. Avoid any broker that advertises get rich quick schemes!
These are some of the key factors every trader should take into consideration in order to make an informed decision while choosing a broker. We advise you to do thorough research on brokers, check out a few, and always trade on the broker’s demo account first to check if things work the way you want.