The market for Forex brokers is so crowded, so diverse, and so competitive that simply choosing the right broker for your needs is one of the most challenging decisions you can be required to make as an investor. Knowing precisely what to look for, and the pitfalls to avoid is the number one choice you can make to put your mind at ease and ensure you pick the right broker for your needs.
The critical qualities that set apart a great broker from a mediocre one differ for every trader in the market. Some care only about commissions, prices, and spreads, other value security above all. Your perfect broker may be different from everyone else.
Here we discuss the vital qualities you need to look at when choosing between a great forex broker that will meet your needs and one you should leave to the side for later.
Security
The single most important characteristic of a reputable and safe broker is maintaining a high degree of security. A bank, or established financial institution, demands as much data security as physical security in the modern day. Handling vast quantities of money and transactions every day, a good forex trader should employ as much information security as an online bank.
Nobody would think to hand over thousands of dollars to an individual on just a promise of being a legitimate enterprise. No trader should blindly hand over cash to a new broker either.
Fortunately for traders, verifying a forex broker’s credibility is a quick and straightforward task. Regulatory agencies and licenses separate trustworthy brokers from fraudulent outfits.
Each country has its own regulating body and its own set of standards for verifying forex brokers. The list of countries below shows each corresponding body.
A savvy online trader, before even considering investing in one or more brokers, would make sure their chosen broker is registered with the appropriate governing body listed above. Checking the broker’s license number against records held by the issuer of that license is efficient due diligence that all traders should do. Just this one five minute check can potentially save your entire investment fund further down the line.
Transaction Costs
Regardless of the currency you trade, the broker you use, or the trades you make; a currency trader is always subject to some degree of transaction costs. For experienced traders it’s simply a fact of life, a financial cost they can factor into the cost of doing business.
Every time you enter into a trade, you are be required to pay the spread or commission for that trade. Like most transactions, you should shop around for the best rates you can find before choosing the right broker.
A tight spread is where the purchase price and the selling price are close together, meaning only small price movements are required to make a big difference in your transaction.
If, for example, you require a tight spread, you should review all the available options with competing brokers to find a price that puts you in profit fastest. Finding the right balance between security, transactional costs, and service is a difficult act, and what works for one trader may not work for someone else.
Decide on the kind of broker you want to find, how you would like to get into profit and find a selection of brokers that could meet your needs.
Depositing And Withdrawing Funds
A good forex broker makes it easy to deposit additional funds and easy to withdraw your earnings with minimal hassle. Often, issues withdrawing funds are one of the first and most obvious signs that a seemingly reputable broker is not all that they seem from the outside.
A good broker has no good reason to make receiving your own funds difficult or time-consuming. The purpose of a broker should be to merely hold your funds to facilitate trading on your own account. A good broker holds funds with a reputable financial institution, providing guarantees that protect your money in emergency situations.
Brokers make their share of money from transactional costs discussed here. Profits belong solely to you, the trader linked to the account. A broker that holds up funds, slows down withdrawals, and holds on to profits is most likely committing bad-faith business practices and should be avoided at all costs.
Trading Platform
The broker’s platform is where the vast majority of online forex trading takes place. This means that their trading platform should be user-friendly, easy to understand, and stable too. Even a great interface is of little use to traders if it intermittently goes down for maintenance or crashes at critical moments.
When shopping around for the best available broker, always look at what their trading platform offers you. Compare the user-interface, available features, and find out what other traders say about the service online.
Some typical features that traders like to have on a reliable platform are a free news feed, charting and technical tools that are intuitive, and an information feed that presents all the information you need to conduct a trade. Our recommendation for a proper trading platform is IQ Option for forex and binary options and Plus500 for CFDs. You can read a detailed review about IQ Option in this article by business24-7.ae
Execution
A broker should always fulfil your order at the best available price.
In typically stable market conditions, your broker should always be able to fill at the market price listed when clicking the “sell” or “purchase” button on the platform. Surprise events, major news releases, or unexpected announcements may cause higher price fluctuations than normal, but these events are the exception rather than the rule.
In normal market conditions, the price at which you click “buy” or “sell” should be, at least, very close to the price you pay for the transaction. For many traders, the speed in which orders are filled is critical to the profits or losses made on the trade.
Just a few pips price difference in either direction can make a huge difference to that trade. Instant execution can reasonably be the make or break selling point when choosing your broker.
Customer Service
While it would be enticing to think that life with the ideal broker will run perfectly smoothly with nothing ever going wrong, life very rarely works that way. Given a long enough relationship and large enough number of trades, something will inevitably be broken or otherwise go wrong eventually.
Whether an unavoidable third-party issue or mistake on the part of the trader or broker, it’s highly likely you will need to contact customer service at some point in the relationship. The critical difference between the right broker and the wrong one lies in the way they respond to both the major and minor issues.
When you do need to contact support, it’s important to know that the service representatives receiving calls, chat messages, or emails are knowledgeable, helpful, and can fix common issues.
This aspect of a competent broker can be one of the hardest to verify ahead of time. It’s often one of the most important too. Fixing time-sensitive issues in a fast and efficient manner can make huge differences, particularly on large accounts. Customer service competence is at least as important as a broker’s performance on executing trades.
Some highly reputable brokers who have performed excellent on trade execution, platform usability, and price, have had notoriously terrible support in the after sales department. These firms can be as easily disregarded as the least secure of the bunch.
Pay close attention to what other traders say online about every broker’s customer service desk. The difference between terrible and great may well one day be the difference between profits and loss.
Choosing Your Broker
When considering all these competing factors to find the broker who fits your needs, it can be almost overwhelming at first. But considering these major points discussed above: security, performance, reputation, platform, and customer service can help you categorize the top performers and make sense of what you want going forward. We can highly recommend you to check some of the biggest players which are normally also the safest and most trusted. One of such brokers is Plus500 – you can read the detailed review on business24-7.ae
Tiny time investment in the early days of your fund may well pay some of the largest rewards you will ever receive in your entire portfolio
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