Learn to Pick Best Broker for Currency Trading
Forex trading is skyrocketing, and it’s arguably the most significant financial market currently across the globe. On average, over 4.5 trillion is traded daily. However, unlike other markets with a central marketplace, the forex market doesn’t have one, and hence traders have to choose a forex broker for conducting their trading activities.
The good news is that there’re a plethora of forex brokers nowadays claiming to offer traders with quality services. Unfortunately, not all brokers are genuine. The worst part is that the broker you choose will determine the overall success in your forex trading.
Therefore, choosing the best forex trader is the first step in becoming successful in the forex market. So, how do you choose the best broker?
What’s a Forex Broker?
A forex broker is merely the company providing the traders with access to the forex platform, enabling them to buy as well as sell foreign currencies. The broker offers the platform to allow the trader to access the market 24-hours.
They get compensated via the “bid-ask spread” of the currency pair. Therefore, choosing the best broker is crucial in forex trading.
So, to ensure that you’re on top of your trading experience, here are some of the tips to allow you to choose the “best” broker.
Choosing the best broker with the highest level of protection is a no brainer. Proper regulation should be the first characteristic of any forex trader. After all, are you going to throw in your hard-fought thousands to a non-legit person?
The best forex broker has to meet all the minimal requirements for operation. The requirements differ depending on the country of operation. For instance, NFA is a popular agency that regulates forex trading in the US. An adequately regulated broker is an assurance of safety for your funds.
The Trading Platform
Most of the trading activity in forex trading takes place in a brokers’ trading platform. That only means one thing for a trader – it has to be user-friendly as well as stable. Moreover, the platform has to have several technical as well as fundamental analysis tools.
The “sell” and “buy” buttons on the platform have to be precise. Besides, a “panic” button is essential as it helps to close all the open positions.
Currency Pairs Offered
There’re a lot of currencies that can be traded; however, only a few get the attention and hence trade with the most exceptional liquidity. As much as the forex broker may offer several pairs, it’s for your own good to choose the broker providing the pairs that you’re interested in.
The major pairs are the EUR/USD, USD/JPY, USD/CHF, and the GBP/USD.
Deposits and Withdrawals
Different forex brokers have specific funding and withdrawal policies. The broker only holds your funds for easier trading, and hence, they don’t really have to make it very difficult to withdraw or fund your account.
Besides, the process should be made smooth and speedy. The methods that are mostly allowed for both processes are via credit card, PayPal, ACH payment, and wire transfer.
In forex trading, time and rates are critical for success. Therefore, you should choose a broker with the best trade execution practices.
Forex brokers can be either market makers or the STP brokers. The market makers follow the opposite side of the trade meaning when they gain; you gain too. The STP brokers offer floating spreads which expand depending on the market movement.
Commissions, Spreads, and Fees
Trading costs do have an impact on the traders’ profits. Therefore, before making any decision, ensure you understand the brokers’ commission, fees as well as the spreads charged. Spreads are a brokers’ primary source of income.
Always choose a broker with spreads that suit your trading requirements. Some charge commissions for each successful trade and others don’t.
One thing for sure is that not even one broker is perfect. Working with a broker is almost sure that at some point, you’ll have to contact their customer care. Therefore, a broker with the best quality of customer support should be a priority.
To ensure that the service responds faster, you need to contact them and check how professional they respond. Satisfactory customer service and on time will always set you above other traders.
The Bottom Line
Having confidence with your broker will help in devoting time as well as attention to the analysis to developing the forex strategies. Typically, a good broker increases the traders’ odds of successfully trading the forex market. Nevertheless, the best broker should have the best customer support, proper regulation, best trading platform, and the best product coverage.