Chapter 3 Important Points To Consider When Choosing A Forex Broker
Since there is no central marketplace for the forex market, traders must select a forex broker to help them conduct their trading activity. And choosing the right Forex broker is one of the most important decisions a trader has to make when setting out to trade the markets.
What should you consider when choosing a Forex Broker?
1) Regulation
The first and foremost consideration in choosing a Forex broker is whether they are regulated. Regulation allows a higher level of protection for traders, especially when it comes to deposits and withdrawals. Checking the credibility of a Forex broker is not difficult and there are regulatory authorities across the world who sift out the reputable ones from those who are fraudulent.
2) Transaction Costs
As a trader, each time you enter a trade, you will have to pay for either the Forex spread or a commission so it might seem obvious to look for one which is the most affordable with the cheapest rates. It might, however, be worth considering sacrificing low transaction costs for a more reliable broker.
Traders should ensure they know whether they require tight spreads for their specific type of trading and then review all the available options. Typically, traditional brokers do not charge fees or commissions on trades. They are making their money from the difference between the bid and the ask price, known as the spread. Seeking out the right broker is about finding the right balance between low transaction costs and security.
3) Trading Platform
In online Forex trading, activity occurs via a broker’s trading platform. Traders therefore need to ensure the platform is easy to use, has a wide selection of technical and fundamental analysis tools and above all,so that trades can be easily entered into and exited.
Other considerations include checking on whether a broker’s trading platform offers free news feeds. Check their market knowledge, including daily updates together with customization options, automated trading options and trading alerts.
Lastly, the best brokers always offer a free demo account. The traders can try out their trading platform before opening and funding an account.
4) Customer Service
The competence of a Forex broker when dealing with account or technical support issues is equally as important as their performance on executing trades so it is important to choose one that can easily be contacted if problems arise. It is a useful exercise to test the availability of a broker’s customer support team by attempting to contact them via their website.
Assistance should be readily available, particularly for a live-chat service. If technical problems occur, it is vital that help is always on hand. A good Forex broker always offers quality, speed and professionalism as part of their customer service.
5) Deposit and Withdrawal Methods
Funding and withdrawing money from your account is very important. You should find out what funding methods the broker offers. For example, almost all brokers accept Credit/Debit cards, Bank Wire transfers, Skrill (Moneybookers), and PayPal. It’s recommended that you check what are all the available funding methods and what fees are applied for each method. Also, check out if the broker has any minimum deposit and withdrawal requirements.
