For any beginner, choosing the right forex broker is critical for trading success. However, a lot of tutors fail to mention this single important subject to new traders before they invest their money in the markets. Picking the right online brokerage is essential because you cannot trade the forex market directly. Instead, it is the brokers who provide the trading platforms that you need to connect to the market, as do all the other market participants. As such, settling for a particular broker means relying on them meet your trading needs.
Your choice of forex broker should reflect your trading aspirations. This is primarily one of the most significant differences between trading as a newbie and doing so as an experienced trader. While a skilled trader already has all of these figured out, you are battling to grasp the simplest of them. This article aims to bridge this huge gap, by helping to know from the get-go what you should look out for in your ideal broker.
Furthermore, the market is full of different kinds of brokers. You will come across the well-intentioned brokers, those with ulterior motives, and those who enter the market with the sole intention of swindling you of your hard-earned funds. As such, choosing the right broker is not as easy as it may seem, at least, not without knowing what to look out for. With that in mind, here are some of the things you should consider when choosing a forex broker:
Regulation is the first and most important thing that you should consider before settling for a broker. This is because when a broker is regulated, it helps to eliminate some of the concerns and risks associated with the business. There is no use opening a forex account if the funds that you deposit will be unsafe with the broker, or even worse, are at risk of being stolen and misappropriated. Trading with an unregulated forex broker means standing the risks of your profits being pilfered or squandered by irresponsible individuals. Knowing that a broker is regulated helps to calm the nerves against such worries and more.
The best brokers should have a high level of security. Different brokers claim to be a lot of things. Nothing confirms their claims more than knowing that they are legit. The best brokers should be under regulatory supervision. Different regulatory bodies are charged with the responsibility of overseeing different brokerage firms depending on their country of residence. In the United Kingdom, for instance, the Financial Conduct Authority (FCA) regulates the activities of forex brokers. In the United States, such function is handled by the National Futures Association (NFA) and the Commodities and Futures Trading Commission (CFTC). CySEC carries out regulatory services in Cyprus, and the Australia Securities and Investment Commission (ASIC) does the job in Australia.
Before you place your money with any broker, you may want to make sure that they are a member of an important regulatory body. The advantage of trading with a regulated broker is that in the event of trading-related infractions, the broker can be fined and securities or your funds are guaranteed. Therefore, you should always check the credibility of a forex broker before you start trading with them.
In online forex trading, you execute most trading decisions through a broker’s trading software. As such, you would do well to ensure that your preferred broker has a user-friendly and stable trading platform. You should make it a duty always to check what a platform has to offer when you are looking for a broker. Does the software offer technical and charting tools that are easy to use? How about free news feed? Does the platform provide you with all the data you will need to trade appropriately? These are some of the most critical questions that a broker’s offering should answer before being considered as good enough.
When choosing a forex broker to trade with, it is recommended that you pick the one that you could contact quickly if you encounter any problems. The ability of a broker to handle account and technical support issues as they should is an essential factor in the trading process. A good broker’s after sales support should be kind and helpful at all times. The ideal forex broker should have a direct channel through which clients can reach them. This might include email, skype, phone, live chat, among others.
Getting a good forex trading education is critical for success in the market. Registering with a broker that provides education resource will help you to avoid the tendency of running before you can walk, which often ends up costing a trader very dearly. Having access to an education portal helps to provide you with an avenue to familiarize yourself with how the market functions, as well as the terminologies, involved. Besides, the forex market is continuously changing, hence, the need for you to seek always to improve your trading skills. There’s no better place to keep up with this than via a trading portal. Asides from understanding the basics of the market, you learn to create your own plan and increase the potential for success.
Transparent Trading Process
Lack of transparency among some brokers is a source of concern for most traders. One of such issues is stop hunting. Stop hunting is a practice where some crooked market maker brokers move prices move prices using a dealing desk attempt to stop trades even when actual market prices are still a few points away. This issue has become a source of worry for traders as some brokers try to undercut them to make an illegal profit. Experienced traders know how to navigate such problems. New traders do not usually have such knowledge. A platform should be investigated for factors such as excessive slippages, stop hunting, and platform freezes, usually by testing the platform with very small amounts in a real money account. The best brokers are transparent and do not indulge in such dodgy and unwholesome activities.
Some brokers support new traders by offering them the opportunity to copy the trades executed by professional traders on the platform. This help to provide beginner traders with the needed mentoring that they require to gain the required experience.
It is evident that choosing a reliable broker is an integral part of the trading process. Therefore, it is important that you devote considerably more time to researching about a broker with these points in mind before you decide to settle for them. Doing this will go a long way in improving your odds of being successful in the forex market.