6 Tips for Choosing a Trusted Forex Broker in 2019

The daily money traded in the foreign exchange market exceeds $5 trillion, a fact that makes it the largest market on the globe. And because there are no central markets in this form of trade, each trader has to select a broker to assist him/her in the trading activities. The number of brokers has been highly increasing and therefore the process of selecting a broker requires more time and research.

The selection process

After deciding to start trading currencies, your next step should be to select a trusted Forex broker. A Forex (foreign exchange) broker is a company or firm that specializes in offering foreign exchange traders with access to trading platforms that enable both the selling and buying of foreign currencies.

As a currency trader, you will need a broker if you need to access the forex market both day and night. Foreign exchange brokers, also called retail forex brokers, are known to handle a small portion of the foreign exchange market. The traders compensate them through the bid-ask spread of the currency pair.

During your selection process, it is good you start by researching on the broker’s reputation and their ability to meet your trading needs. Majority of top forex brokers 2019 allow the prospective traders to test the services with demo or practice accounts so that they can understand the trading system before trading. To remain on the safe side, test as many platforms as possible before deciding on the one to use.

Here are the key factors to consider when selecting a forex broker.

The regulatory compliance

Regulatory compliance is the most important factor in foreign exchange trading. Therefore, be sure that the broker is under the regulation of your local foreign exchange market regulator. The purpose of a foreign exchange regulator is to mold and oversee the financial intermediaries within the country.

For example, in the United Kingdom, Financial Conduct Authority (FCA) regulates the forex trade. Financed by the regulated financial companies, including foreign exchange brokers, the FCA has two main tasks – licensing and governing the financial entities. The organization works with the Prudential Regulatory Authority (PRA) and BOE (Bank of England) to achieve that.

When doing your selection online, remember that a professionally designed website does not ensure that the broker bears the stamp of approval from FCA. You can also check the FCA list of brokers to ensure that the broker you are about to select observes the rules. To avoid losing your open, open a trading account with a company that is properly regulated.

If you need to learn more from the users before making a choice, online user reviews will provide you with useful information. Reviews are usually unbiased, and they will list the benefits and the problems to expect with every broker. That way, you will manage to make a great choice before investing your money.

The account details

The eminent forex brokers offer a variety of accounts, which include the following:

  • Micro account

The micro account requires the traders to deposit a 1K lot size. The price of every pip is usually 10 cents. Therefore, you will require more than $100 to open such an account.

  • Mini account

When planning to invest an amount below 5K, the mini account is a good choice. You can open the account and start trading mini lots of 10K. The cost of each pip is $1. To reduce the trading risks, you will need more than $1000.

  • The standard account

When planning to trade the standard lot sizes, which are above 100K, go for the standard account. Some brokers will allow you to try the account with 10K, but it is recommendable you trade with 20K. The risks will be higher if your trade position is big.

The commissions and spreads

Foreign brokers earn through commissions in form of spreads. The spread is one word for the difference between the buying and selling price the broker provides. A quick example, the primary difference between the EUR/USD ranges between 1 and 3 pips – the difference depends on the broker. Moreover, the spreads might be variable or fixed. Mostly, brokers who choose fixed spreads set the spreads for major currency pairs at 1-5 pips. The crosses are mostly ranging between 6 and 20 pips.

Under the normal market conditions, variable spreads should remain low. The pip can range between 0.1—1 and 1-6 for crosses. But due to the volatility, the spreads can change at any time and whenever they change something enough to shake the whole market happens. An announcement of an interest rate policy can alter the lending rates causing the market to move up and down rapidly before normalizing. Go for a spread that matches your needs.

The trading platform

The foreign market remains open both day and night. In fact, some people trade ten minutes and then skip several days before trading again. Therefore, a reliable and user-friendly trading platform offering all the necessary features, advanced chart station in addition to indicators. Brokers may decide to build personalized software or purchase the readymade software in the market. Test the software on performance and check whether it will meet all your trading needs.

The customer service

The customer service will help you know the broker’s reliability. Check whether they can provide their services in the local language and their response rate. Be ready to check the amount of time they will take to respond to your requests. Some will ignore your requests and others will take a very long time to respond. Do not go for such brokers, search for others.

Additional services

To attract more customers, most foreign exchange brokers offer extra services. Some will provide educational materials to help you earn more. Go for the brokers offering useful services to facilitate your trading.

Conclusion

You will rarely get a perfect broker but if you believe that an investment in forex trading is worthy, you should select a broker carefully. Foreign exchange trading requires you to devote both time and attention to the analysis. To be successful in this form of trade, do research your research carefully.

Add Comment