The Foreign Exchange broker you choose plays a significant role in your success when it comes to trading. Before you decide, you need to answer various questions. The earnings of a broker are not enough to help you make a decision.
You cannot start trading without having a good broker. The market has many brokers looking to win your business. When you do a simple search on the internet, you will be bombarded with a huge number of brokers. This article contains the top four features you need to look for while searching for a broker.
It is important to check out the reputation of a broker. In the US, National Futures Association (NFA) offers brokers with certifications. Therefore, a reliable broker will be a member of this agency, which is a regulatory organization for the futures industry.
For a broker to get this certification, they must pass a written examination and a qualifying exam.
A well-designed website does not mean that the broker is a member of NFA. To know whether a broker is a member, visit their website and check the ‘About Us’, where you can get the NFA member number.
For countries outside the US, they have their own regulatory body. To ensure the safety of your deposit, ensure you open your account with a broker that is duly regulated.
Fortunately, you do not have to spend most of your time searching for a foreign exchange broker. Some platforms have searched for the best Forex broker in the market to simplify your search.
They have reviewed various brokers based on the trading platforms, previous customers’ reviews, assets, regulations, and fees. Therefore, their review is honest and unbiased.
Personal Data Security
When registering with a broker, you have to share crucial personal information such as credit card information, bank account information, copies of utility bills, passport information, and so on.
Therefore, if a broker’s internet connection is not secure, hackers can steal your information easily, and they can do unauthorized transfers from your accounts.
Therefore, ensure the broker you select has reliable data security. Most trustworthy brokers install SSL encryption to prevent your personal information from getting into the wrong hands.
Every broker has various account offerings. So, look for multiple brokers and compare features such as commissions and spread, leverage and margins, ease of withdrawals and deposits, as well as initial deposit requirements.
Commissions And Spreads – If you come across a broker that accepts commissions, they may charge a certain fraction of the spread. The difference between a bid and ask for a currency pair is known as a spread.
Brokers that do not charge commission make money through wider spreads. Keep in mind that the wider the spread, the harder it is to profit. So ensure you understand how a broker makes their money before you decide.
Leverage And Margin – Based on the broker that you choose, you can have access to leverage available in your margin account. For instance, if you get a broker offering a 50:1 leverage with an account size of $1,000, you can hold a position valued at $50,000.
Leverage is an advantage to a trader since it improves your profits. However, it is essential to note that leverage can easily damage your account since losses are magnified too.
Withdrawal And Deposits – Every broker has specific account depositing and withdrawal policies. Some allow traders to deposit using PayPal, ACH payment, credit card, Bank check, wire transfer, or personal or business check.
Withdrawing can be either through wire transfer or by check. Also, the broker may charge you for either transaction.
Initial Deposit – The initial deposit depends on the broker, some requiring as low as $50. Some brokers offer micro, mini, and standard accounts, each with different initial deposit requirements.
In forex trading, timing is crucial. The value of a currency keeps on changing drastically, so you need to act fast to get the best deal. Therefore, the broker you pick should be able to trade in a way that will be most advantageous to you.
Reliable brokers should be able to work on your schedule and take action quickly when it is needed. Selecting a broker is a challenging decision to make. However, these four features mentioned above will help you choose a reliable broker.