Anyone that wants to trade forex faces the same dilemma – choosing a forex broker. Make the wrong selection and you’ll pay dearly. The good news is that modern-day traders are able to learn from those who’ve gone before them, so take advantage of this and read these broker selection tips that led me to real success.
The task of selecting a broker should not be taken lightly, as choosing the right broker is essential for success. However, choosing a reliable broker with competitive prices is easier said than done. A quick Google search will yield endless results, so much so that combing through them can seem overwhelming. Of course, you’ll need to look at more than one option to get the best deal, just like you would for car insurance or any other important financial purchase. If you’re looking for a trustworthy broker, try following our 5 tips to ensure that you make the right choice.
Tip #1: Check that the Broker is Trustworthy
First and foremost, you need to make sure that you’re looking at a trustworthy company, or else you’ll probably never receive your withdrawals, and that’s only the start of the headaches you’ll have to deal with. The easiest way to do this is to check for regulation status through an agency like the National Futures Association (NFA) or Commodity Futures Trading Commission (CTFC) for those located in the United States. Other countries use different regulatory bodies, so be sure to do research on those to ensure that credentials are legitimate and don’t put it past a shady broker to make up these details. You can also check online to see what other real traders are saying about the broker. This will give you some good honest feedback, but do remember that some reviews may be left by the broker itself or that some ex-clients may be angry with the broker because they lost money at their own fault, so read reviews with a grain of salt and try to side more with what the bulk of the reviewers say.
Tip #2: Research Account Details
Each broker will offer different options in each of these categories:
- Types of trading accounts (unless they only offer one account) that ask for different deposit minimums, anywhere from $1 to hundreds of thousands of dollars
- Separate leverage options from smaller amounts like 1:30 up to flexible options of 1:1000 or higher (many regulators restrict leverage caps, but you probably won’t need higher options as a beginner)
- Commissions and spreads, which will affect how much it costs you to trade through the broker
- Deposit and withdrawal options, along with the fees they will charge you for withdrawing. For example, you can withdraw for free using a credit card with some brokers, while others will charge you 7% or so.
- Available currency pairs
- Promotional offers, like bonuses, contests, etc.
Tip #3: Make Sure that Available Assets are Favorable
Some brokers will only offer the ability to trade major and minor currency pairs, while others will offer exotics, along with other options like commodities, stocks, precious metals, etc. It’s nice to have more options, but you’ll need to decide what you actually do or don’t plan on trading. If you aren’t worried about any of the extra things, then it won’t matter whether the broker offers them or not.
Tip #4: Check Out Customer Service Options
You’ll want to be able to get in touch with an agent quickly if something goes wrong. This could be anything from a missing withdrawal, to an issue on the trading platform that caused you to lose money, to being locked out of your trading account with no other way to reset your password. Most bigger companies offer LiveChat directly on their website so that you can connect with an agent immediately in these cases. Other contact options include telephone, email, and other options like Skype or Whatsapp. Operating hours are important as well – it isn’t surprising if a broker is closed on the weekends, but you’ll want to choose a company that has reliable support hours on weekdays. Also, try reaching out to customer service to see how long it takes to receive a response.
Tip #5: Look at Trading Platform Options
Many brokers offer popular trading platform options like MetaTrader 4 or 5, while others offer their very own platform. You should know that different platforms offer different features, like the ability to open a demo account, backtesting support, alerts, different order entry types, and so on. Many beginners might be happy with a simpler platform without all the bells and whistles, but you still want to ensure that the broker offers a good platform with an interface that is clear and easy to use.