Selecting the best forex broker is of equal importance as your skill in trading the market. It’s possible that you might select a broker that does not provide you with the right tools or for whom you never receive your hard earned money from upon withdrawal of your funds. There are many good forex brokers out there so there is no excuse for selecting a bad one. Consider the following aspects and perhaps create a checklist of things you must see in a broker before you even try to open an account with them.
First of all, it would be optimal that you only consider a broker if they are registered with the CFTC (U.S. Commodity Futures Trading Commission) and/or are members of the NFA (National Futures Association). These are self regulating organizations that impose rules for which forex brokers must follow in order to maintain membership. These brokers proudly show their membership on their “About us” page or even on their front page. In addition to this, the FTFC and NFA websites allow you to look up a firm by name or ID.
If a website is promising you all kinds of success and “revealing trading secrets,” then chances are that this is not a reputable organization. As with any other industry or situation you find yourself in, avoid falling into the traps of gimmicks and hype. A reputable forex broker generally offers you a basic platform, such as Metatrader and a few tools like chart pattern indicators or a web-based trading Java applet. Often times, these are included without any extra investment other than opening an account.
You should familiarize yourself with the types of forex accounts that a currency broker you are looking over offers. There are micro accounts, basic accounts and so on. These accounts are usually based on how much money you are willing to put in to them and often times, limit the amount of currencies you can trade with. The micro accounts, which only require an investment of a couple hundred dollars or less, usually allow just a few of the major currencies to be traded. Another important thing to note is that the trades you place in these accounts never actually reach the real market, they are only impacting the liquidity pool of the broker. There is also something known as market depth, generally a quality that a large account might be given; there is a minimum amount your trade requires for it to make an impact on the currency market. Take note of commission, whether your account type or broker in general asks for a part of the money you gain from a trade. There is nothing inherently wrong with any of this, but you need to make certain that what you are getting out of an account is indeed what you intended for.
Figure out how large your fx broker’s operations are and specifically, what sort of connection they have to the market. Some brokers will have a feed directly from the exchange. These brokers are usually large operations and may be based in London or New York. Some brokers may be affiliates of another broker who gains a commission from the profits of their affiliate. The case might be that you have opened an account with the affiliate and are using their rules, account benefits and customer service but in fact, your account is on the servers of the larger institution. This is useful information because your broker might be in Miami but the servers you trade on are in fact in New York.
Customer service, as with any organization in any industry, is an important aspect of selecting a company you would like to do business with. 24-hour service is the ideal as is the quality of the assistance you receive. Be sure to chat with the customer service and ask them as many questions as you have. If customer service is pushy and has the propensity to use gimmicky lingo, then think about the previous paragraph that discussed this very matter. The account setup process should be smooth and quick. If customer service is evasive or you are not receiving the service you expected, then you might consider the idea that this broker is not running an honest operation. It can also provide a level of legitimacy to a small broker, since they are after all, an affiliate of a much larger firm.
You should first open the smallest account with a minimum deposit to test the waters of a forex broker and then upgrade when you are ready. Minimizing your risk in investment holds true not just in the market itself, but also in the broker selection process. A decent currency broker will have a fairly simple process for which to upgrade your account. Try withdrawing a sum of money to make sure that the process will run smoothly before you start to see a growth in your funds. With regards to your small deposit, you will have less of a loss in the case that you do have trouble getting money from your broker.
There are forex broker review and rating websites that provide you with the stories of fellow traders and their experiences with brokers. Don’t bother taking a chance on a broker that has poor or no reviews. Pay close attention to multiple reviews about having trouble withdrawing money or any other comments that show red flags. Finally, though counterintuitive, you should ignore some of the bad forex broker reviews that are left by unsuccessful traders who blame their broker for their own shortcomings.
As long as you do your research, you can find the best online forex broker that fits your needs and provides you with an adequate platform for you to trade on. Read forex broker reviews & ratings, take note of forex trading account features, talk to customer service and only pay attention to businesses that are legally registered. And finally, an extra word of advice. Don’t forget to try the forex broker’s demo account with the amount of money you plan on trading, but also remember that the forex demo account is on a different server than that of the live one
