Over the past few years, there has arisen a plethora of forex brokers and this has affected quality of service negatively. Choosing one as a trader has become a tedious task since you must do due diligence in order to choose the best forex broker that will meet your needs.
Failure to do so could have a negative impact on your hard-earned money since scam brokers have arisen over years. To avoid falling victim to the rampant fraud these days, you must seriously consider the factors below which will aid you in choosing the best forex broker.
10 tips to choose the best forex broker.
Regulation is a must.
A broker who has not gone through the process to acquire regulation is not worth trading with. Unregulated brokers can do any fishy thing they want; and get away with it because there is no third eye to supervise its day-in day-out dealings.
Aside that, the regulatory agency must come from a country which takes regulation issues seriously. Believe it or not, not all regulation is weighted equal. Many countries do not have serious regulatory agencies, so you need to put that into consideration as well.
Look towards EU countries, UK, USA and Australian regulated brokers. These countries’ agencies are known to be up and doing.
The best forex broker must take customer service seriously.
There should be numerous ways for you to get in touch with your broker since you are going to have issues along the line. If you have a hard time contacting your forex broker, then it does not have your best interest at heart.
Even if you are not facing any issues, you would definitely have some enquiries on some processes. How fast your issue as a customer is resolved, and how fast your broker gets back to you on your queries says a lot about the broker.
Before any forex broker would verify your account to qualify you to trade real funds, you are going to submit some documents. These documents contain private information and they come in the form of ID cards, utility bills, bank statements, credit/debit card information and so on.
The best forex broker with your interest at heart must ensure that, such personal information about you be kept safe. The broker should have strategies in place which ensure that; all your data cannot be accessed by intruders and by so doing store it securely.
If your personal data falls into the hands of the wrong person, you stand to lose a lot.
Security of funds
The money you deposit to trade must also be saved at the right place by the broker to avoid any unfortunate circumstances. One thing you need to ensure is that; the brokers policy includes segregation of accounts. This simply means that the broker runs on its own capital and not your deposits.
Your broker makes money from you. Either through spreads or commissions. In some cases, from your losing trades and negative swap as well. If you keep trades open overnight, you should pay good attention to the swap rates.
The charges must make economic sense to you as a sole trader and if not; you are at the wrong place.
You must take into consideration brokers that have low charges; and have no hidden costs before you decide to trade invest your money with a particular broker. With this said, cheaper costs of trading do not always equate to quality.
When you want to buy or sell an instrument, the trade must be executed as fast as possible. This must be of utmost importance to you as a trader if you are a scalper. Any delays in execution means you will not be filled in at the right price; and that can have an adverse effect on your results.
Trade execution speed should be in just a few milliseconds or seconds. Anything above that makes the dealing of the broker very fishy.
Ease of deposits and withdrawals.
The best forex broker for you must have many options for deposits and withdrawals and the process must be smooth as well. It is worthy to note that; some brokers charge for these so it will be in your best interest to choose one that has little or no charges.
Although the focus is forex, brokers of today are diversifying by adding instruments like cryptocurrencies, stocks, commodities, indices and many more. A forex broker that has a wide array of market instruments will make it simple for you if you would want to explore other markets.
Even with currency pairs; the best forex broker would give you access to many of the major currencies paired against each other. Some brokers do not have some currency crosses available. A suitable forex broker must provide access to all major pairs, all currency crosses and a lot of minor pairs. This gives you many options to choose from.
If your currency pair access is limited, it restricts you as a forex trader which is very inefficient.
This is very crucial if you are new to forex trading all together. Your hunt for a good broker must include one that has the knowledge of its clients at heart. Without any strong knowledge in this market, you are going to fail woefully.
A broker must have simplified educational resources in diverse formats like articles, videos, pdf’s, webinars and the likes. If your broker does not prioritize your knowledge of the market, you have lost before starting.
The quality of education varies from broker to broker; so you must do due diligence to notice the one that comes easiest to you.
Reviews and ratings.
What other people think about the broker you want to trade with is very crucial. A simple online search would give you results on the experiences of current or past customers of the broker in question. Brokers who are rated highly by a lot of people are the ones you should consider.
However, reviews and ratings may not be a good metric to choose a broker since they may be highly inaccurate. Some positive reviews may have been paid for and some negative reviews may also come from clients who are simply frustrated for no good reason.
The trick is to see what the majority is saying and move with it. A very good platform for reviewing brokers is trustpilot.
Trading platforms in use by the broker.
It is your duty as a trader to investigate the trading platforms that are available and test them to see whether they fit you well. There are applications like Metatrader and the likes, web based platforms, and social trading platforms.
More is always better since you get to have options. Always make sure you understand your selected platform well before trading. If your desired platform is not available with a specific broker; you can always skip to the next before you find a suitable one.
Since this list may not be exhaustive, I would like to hear your opinion on this matter. Drop a comment in the comment box below to share your view or queries.