The Forex market is very unique in many aspects, including its 24-hour schedule and its rapid growth. However, one feature really sets it apart from the rest of the world’s financial markets; It is by far the largest market in the world with about four trillion dollars traded daily.
As a result of its high volume of trades and its easy access to anyone, the Forex market and more specifically the number of Forex brokers is growing faster than ever.
A meticulous selection to choose from is always a good thing, however, the large number of Forex brokers available can make the choice much more difficult for a new trader. The decision of which broker to choose is crucial, and one that will strongly affect your future trading and your success or failure.
So to choose a broker wisely, here is a short list of features you should look for.
-Regulation: The most important aspect to check before choosing a broker is, if your company is regulated and by which of the regulatory authorities. If the broker’s signature is located in the United States, it must be regulated by the National Futures Association (NFA). You must also be registered as a trader of the Futures Commission (FCM) with the Commodity Futures Trading Commission (CFTC). This is a very simple verification. You can check the membership status of an NFA broker and any disciplinary action by visiting the official NFA website.
– Professional Web Site: “Show me the website of a company and I will tell you who they are”. The way the site portrays the company can really give you a clear picture of who you are dealing with. Obviously, this is a subjective issue, but there are some very basic questions you can ask. Does it block a lot? Is it easy to navigate? He is professional? These are all the questions you need to ask when learning about any company, but it becomes much more crucial when you are about to invest your money in the company in question.
-Spreads competitive: This is a very important aspect to examine before signing with a broker. What spreads do they offer? Just to give a very basic explanation, the coins are traded in pairs. The difference between the sale price and the purchase price is called spread. A good indicator is that the spread should not be more than 5 pips for the main currencies. The main ones include: EUR / USD, GBP / USD, USD / JPY, USD / CHF, AUD / USD and USD / CAD.
– Customer support: This is a more important feature in Forex than in other industries. In addition to the frustration caused by the lack of customer support, this can lead to large losses in real money. If, for example, your broker does not respond to your calls or emails in a timely manner, when you request to open or close a market-based position, it may take too much time and result in losses for you. Before signing up with a specific agent, test your customer support by sending an email, calling or chatting with your online representative. If you do not get the answer you expected, think twice before opening an account with that broker.
-Fast Response Time: This is connected to customer service, but goes beyond that. Even if the customer service is satisfactory, it is important to verify that when making a request to open or close a position, your request is met with a minimum delay. The most effective way to verify this is by opening a demo account with the broker, which you must do anyway to improve your trading skills. This is not a perfect method as very often, the speed of the demo account is in fact different from the real account, but it is the best way to check given the tools that are provided.
– Reasonable leverage: Leverage in general is what gives the Forex market a strong attraction for retail traders. However, the risks of negotiating with high leverage are as great as the advantages. The most serious brokers offer leverage ratios that start at 100: 1 and go up to 400: 1. The higher the leverage, the greater the risk to the broker. If a broker offers a leverage that seems too high for you, this could be a good indication of that broker’s future, or lack of it.
– Stop Loss Protection: This is a feature that allows you to make sure that your losses do not exceed a certain amount. Most brokers offer this feature, but it is still important to check with your broker before signing.
-Plant Competitive Platform: This is one of the most basic and essential verifications you need to do before choosing a broker. The trading platform is where everything will go down.