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If you are interested in trading foreign currency, the first thing you need to do is to find a dependable forex broker. A forex broker is a company that gives its traders access to a forex trading platform. These platforms allow traders to buy and sell currencies throughout the day on the forex market. Most brokers allow potential clients to test their platform with a demo trading accounting. This allows traders to get a good understanding of the system and whether it will work for them.
Are you looking for a reliable forex broker and are not sure of what you should be looking out for? Below are factors to consider when choosing a forex broker:
Regulation status
A regulated forex broker is one that has registered with a government-recognized financial body. This body oversees and controls the operations of brokers. Finding out whether a broker is regulated is mandatory as regulation ensures adherence to strict rules set by regulation bodies. The rules revolve around matters such as good cybersecurity practices, investor compensation, large capital base, and account segregation among others. Avoid working with unregulated brokers.
Variety of trading instruments
Being in a position to invest in different financial markets simultaneously is a great advantage to a trader. Working with a forex broker that provides a wide range of markets such as commodities, CFDs on indices and cryptocurrencies, EFTs and stocks is a good idea. Admiral Markets is a good example of a forex broker that provides a variety of markets and tools.
While a large number of currencies are offered for trading, just a few of them get attention and trade with the biggest liquidity. Find out if the broker is offering major currency pairs, in which many traders and investors are interested.
Spreads, fees, and commissions
Forex brokers make money through spreads and commissions. There is no shame in looking for brokers with low spreads and commissions, however, be on the lookout for marketing techniques. Lower spreads advertised on websites do not mean that you will have the spread continuously. It is not always the best idea to look for a forex broker using low spreads only. This is because the displayed average spread is not a guarantee that it will apply to your order.
Depending on your account, a broker may not charge a commission. Brokers that use commissions may charge a certain percentage of the spread. This is the difference between the asking and bidding price of the forex pair. Trading costs include miscellaneous fees. Some brokers charge extra fees for deposits, withdrawals, credit cards, wire transfer, account closing, and inactivity.
Different trading accounts
A reliable broker should provide different types of trading accounts. These accounts should have a variety of benefits for different trading styles. Trading accounts can be categorized depending on the spreads or leverages, the levels of protection and the types of trading instruments.
Trading platform
To ensure your individual needs are met, choose a broker that offers a trading platform you can understand. Each broker provides traders with software for trading. The platform should be easy to use, install and intuitive. A properly designed platform should have visible buttons for buying and selling and a panic button to close your open positions. There are trading platforms with confusing user interface and complicated configuration requirements. Stay away from such platforms as they are hard to understand and trade on. Other factors to consider are order entry types, strategy builders, trading alerts and customization options.
Trader education
Forex brokers offer ongoing education and training sessions to traders on their platforms. This education ranges from platform training, training on technical analysis and forex market training among others. Beginners might not be familiar with the terminology used in the forex market, and choosing a broker with the right training tools is the way to go. Furthermore, seasoned traders need education too because innovative technology is continuously adapted into the forex market.
Customer Service
Forex trading happens throughout the day. A broker should have customer support available round the clock. When choosing a forex broker, consider whether you can speak to a live attendant instead of a frustrating and time-consuming auto attendant. Calling the broker’s support number will give you an idea of what to expect in terms of wait times and the ability of the customer service rep to provide helpful answers to questions about leverage, spreads, regulations, and the company.
