Choosing a forex broker can be a daunting task for a beginner. This is because of the many factors that need to be considered before you make any decision. Most forex brokers have similar services, and it is hard to choose one over the other.
However, if you are looking for an easy time while choosing your FX broker, then consider following these few simple steps:
Choose a Reputable Broker
A reputable Forex broker ensures that you get what you deserve from their services. A reputable FX broker will give you all the information on margins, spreads and commissions fees before anything else. Remember that reputation in this business means everything when transparent dealings with clients. Transparency also helps reduce cases of fraud and theft, which is common in this business.
Different forex brokers will offer different account options. You might want to consider a basic retail account with the broker if you are a new trader. This option would give you all the basics, such as access to analytics tools and live accounts for practice trading. More advanced traders may prefer a standard or even better type of FX trading account that offers them more resources and services such as margin financing, direct market access, among other things.
Commissions fees, especially beginners, can be quite confusing because most brokers have similar deals on commissions fee structures. It might be challenging to notice the difference at first, but once you start using each platform, it should become clear which one offers you a better deal. The best way to go about this is by checking on the fee structuring from your potential broker and comparing it with others and their rivals. You can also try out the broker’s commissions fees calculator to get a rough idea of the charges involved before signing up with any broker.
Customer service is very important when it comes to forex brokerage services. Remember that there may be unforeseen issues that might arise while using these platforms at times. If you have an excellent customer support team, then it will be easier for you to address such issues quickly instead of having problems turn into major ones in the long run. Most reputed Forex brokers have availability through different channels, including phone, email and chat.
Consider the platform that you will use to trade with your broker. Most brokers have web-based trading platforms, which are fine. Still, advanced traders who want a more personalized experience may opt for a downloadable platform or even a mobile application. This is very important, especially for professional traders and beginners alike.
Always choose a reliable company with 24/5 live chat and email customer support if questions arise. Try testing their response time before signing up for real!
Make sure spreads are low enough for your style of trading. Markets can be volatile, with spreads widening at times of higher volatility. Choose a broker that has low spreads in all market conditions.
Use independent online comparison sites before signing up to a forex broker to make an informed decision. Be wary of promotional offers as they may attract new customers, but many will have hidden terms and conditions or be withdrawn after a short period.
Look out for the maximum leverage offered by the foreign exchange brokers you are considering. This is measured by either looking at the margin divided by security amount (e.g. a 100:1 leverage means that for a 10,000 USD deposit, you can trade 1 million USD) or by choosing brokers with low margin requirements ( e.g. 2% margin is equal to 100:1 leverage).
This article provides all of the factors required when choosing between forex brokers. By taking the time to do some research, anything less than perfect could impact your success as a trader. Beginner traders should practise forex trading in a demo account offered by Saxo capital markets before starting live trading.