What Key Factors Should You Consider When Selecting A Broker?
Choosing a broker is the first step into forex trading. A broker is a middleman between you and your target buyer or seller. The broker charges some commission to allow you to sell or buy orders. You should therefore get the right broker to succeed in forex trading. Here are the factors you should consider.
1. Customer Support
Forex trading is throughout. A good broker has a live person to attend to your needs anytime. Often, you can reach the person on the phone for convenience. You can gauge a broker’s customer service skills with a quick call. A reliable broker has average wait times. These waiting times are realistic.
2. Credibility
As mentioned above, a broker is your link to sellers and buyers. Meaning your broker should have a good reputation. Broker reviews can give you a picture of whether or not a broker is credible. If it’s a United States broker, confirm that they are a member of the National Futures Association.
The broker should also have a Commodity Futures Trading Commission registration certificate. A credible broker won’t wait for you to ask about their NFA member number. Instead, you will find the number in the broker’s About section on the website. If you choose a broker without American borders, ensure the governing regulatory board registers them.
3. The Trading Platform
After confirming your broker is legitimate and compliant, get more specifics. Check the broker’s portal to the markets. First, the platform should have the right technological tools. Secondly, the platform should have all the essential tools you need to trade successfully.
It should make it easy for you to enter and leave a trade. A well-designed trading portal has a clear sell and buy button. If you’re unsure, the platform should offer you a panic button.
The panic button closes all your open positions. It allows you to re-evaluate your options and make better decisions. Avoid brokers with poorly designed trade platforms. These platforms could cost you.
Check the customizability of the forum. It should have automatic trading features. Backtesting features are also crucial. Trading alerts and strategy builders will smoothen your trading experience. Free demo accounts also help you build confidence before risking real money. A broker with a seamless platform is the best choice.
4. Account Types
Every Forex broker has four unique account types.
- The leverage and margin account is one of them. According to your broker of choice, you can access leverage, usually in the broker’s margin account. Leverage also varies from one broker to the other. One broker would have a 100:2 leverage. Another broker will have a 200:1 leverage. Remember, leverage works to your advantage. It greatly enhances your winning potential. At the same time, leverage magnifies your chances of losing. You should use leverage carefully.
- Initial deposit accounts are the second account type. You can fund most forex accounts with a small starting capital. A broker with a minimum standard starting capital is a good option. Such a broker should have micro-accounts with unique initial deposits for your convenience.
- Ease of depositing and withdrawing. A good forex broker has transparent funding and withdrawal policies. Your broker should allow you to make online deposits. You can use a credit card or a wire transfer. Other brokers also accept bank cheques or business cheques. The same should apply to withdrawals. Remember to ask about the withdrawal fee for both withdrawals and deposits. Choose a broker that accommodates your needs.
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- Spreads and commissions. The right broker could charge a standard spread percentage. Your spread is the difference between an ask and a bid of your forex pair. Your broker could also fail to charge you a commission. When this happens, the broker could instead widen the spreads. Sadly, a wider spread will make it difficult for you to profit. A broker who charges a commission is a better choice than one with a wide spread.
5. Bonuses
You can have a long list of brokers who’ve fulfilled the criteria mentioned earlier. You could use bonuses to rule others out. Some brokers give new traders bonuses as a welcome reward. These bonuses could boost your trading capital.
The bonus percentages also vary with brokers. Some brokers have 50% bonuses. Others have 30% bonuses. Usually, your broker adds your bonus to your account immediately after you sign up. This means that a higher bonus will increase your starting capital.
Some brokers also allow you to withdraw these bonuses after you hit a particular trade volume. All these terms are apparent in the right broker’s terms and conditions. Image Source: https://www.istockphoto.com/photo/crypto-trader-at-home-gm1439500913-479754407?phrase=forex%20broker
6. Available Currency Pairs
The beauty of forex is flexibility. You can trade in whichever currency pair you prefer. The right broker should therefore offer you a variety of currency pairs. Having many pairs shouldn’t be the stop.
Check the liquidity of those pairs too. You’d want more liquidity to ease your securities or asset conversions into cash. The pairs should appeal even if your broker offers you various currencies.
Conclusion
The right broker will make it easy for you to trade. You’ll then devote time to analyzing forex and discovering better strategies. Fortunately, you can get the right broker with some intense research. The above considerations can facilitate your research. They can also increase your chances of thriving in the competitive forex markets.
