The Ultimate Guide : How to Choose the Right Forex Broker

In advance of selecting a broker, we hope that you have become cognizant of the information in the previous posts in our FX school and you are brimming with confidence and excitement to trade foreign currencies. Now:

  • Are you in a possession of the moral bravery and perseverance to identify and overcome the emotional issues inherent to forex trading?
  • Do you feel the drive and attentiveness to focus all of your energies on the single aim of succeeding in whichever endeavour you embark upon?

If you are packed with the focus, drive, and persistence needed to conclude any action successfully, then Forex is your battling ground.

Equipped with the necessary expertise, and pretty much invincible to the hacks and scams of impostors via the information we offer on this website, you are ready to face the next step of your trading. After having obtained the background details and information, the initial step of trading Forex should be launching an account with an online broker.

Today, an immensely overwhelming number of brokerages exist on the retail FX market, with everyone praising its services as the most top-notch. Seeking out and selecting the one that’s most suitable for your necessities might be quite daunting a task.

Nonetheless, as anticipated, we have put our effort to facilitate your task by scrutinising some of the most influential and trustworthy brokerages in existence. These can be discovered in this website’s Forex broker section. Here, we’d like to clarify the significance of the different criteria along with which you can review the brokerages we have already gone over, and make a choice.

Owing to the immense variety of options, it’d be unreasonable to delineate a broker who is perfectly suited for all trader types. Rather, you should have your own ideas about trading in advance, and then compare them with what each brokerage is providing, thereby selecting the most appropriate fit for you.

Further down, we shall scrutinise the various criteria in order of significance.

Broker Security

If we were to invest substantial amounts of funds only to be pilfered by unabashed scoundrels, then what is the point of incepting a Forex account in the first place? All our efforts of analysing, studying, and mastering the fundamentals of trading will be in vain if our funds are embezzled by brazen crooks.

Therefore, the foremost need of a trader when opting for a broker is it to be secure and possess a trustworthy track record. Nevertheless, it’s also true that a retail trader does not possess the expertise, tools, or time to determine the reliability of all brokers.

This is when the regulatory authorities of certain countries (FCA, CySEC, ASIC, IFSC, BaFIN, CFTC, to mention a few) come into play. They are there to screen everything and proceed to discarding the undependable brokerages. For instance, if an FX broker is a part of NFA, and it is registered with CFTC in the U.S.A., or with other relevant entities across the globe, then this might be among our best picks.

Lastly but nonetheless less importantly, to facilitate you further, we have already reviewed some of the top-notch, according to us, forex firms on the market.

Initial Deposit

The prerequisite for an initial deposit most of the time comes second when new-fangled traders are comparing brokerages. The grand majority opt for those firms with the lowest deposits, which comes naturally. Indubitably, this thinking is accompanied by its logical reasons; nonetheless, the initial deposit should be, indeed, at the end of your comparison list, unless you really are in a possession of a minuscule amount of capital (If that’s the case, what’s the point of trading, then?).

The bulk of serious brokerages that provide superb services might opt for a somewhat high initial deposit ($500-600, for instance) to safeguard that its clients are also serious about trading. Besides, the forex market is typically quite volatile, so an account that’s less capitalised is prone to being annihilated during one of the market’s regular oscillations.

It’s true that every newcomer to trading should only risk funds she/he’s comfortable with if a loss occurs. In this regard, the initial deposit should never cross the affordable line for us. Yet, if we commence a trading career with $25-50 and 5:1-10:1 leverage, this will be quite similar to commanding a demo account.

Spreads

Irrespective of the expertise level of FX traders, spreads are of an utmost importance. Due to the broker typically getting a compensation for the provided services by expanding the bid-ask spread past the quoted values on the whole-sale interbank market, a broad bid-ask spread means a huger chunk of your cash going to the broker’s funds.

A trader is obliged to pay this charge irrespective of the gain or loss he makes during a trade. Thus, always strive for those firms, providing the top spreads in the FX galaxy. Incidentally, it might be prudent to incept an account with a brokerage whose spreads are slightly higher in exchange for its stability. Even if that’s the case, a spread of more than three for the pair EUR/USD is not a bright idea.

Deposits and Withdrawals

It won’t be the smartest to trade currencies when you are hindered to deposit or withdraw your retributions. When opting for a brokerage, there’s no reasoning for any kind of excuses or delays when requesting withdrawals of funds.

Similarly, clients should not face any impediments when depositing cash with the chosen broker. Reflect on this: if a broker cannot ensure a smooth deposit process, what’s the likelihood of it guaranteeing an adequate trading environment?

Margin and Leverage Prerequisites

The second most vital element when deciding which broker to invest with are the margin prerequisites and leverage ratios. Beginners would find it easier to risk money on lower leverage, so the maximum leverage is uninteresting for them. What they should focus on, instead, is the minimum level of leverage.

Seasoned investors would find assessing the value of a higher leverage more alluring. By definition, prosperous traders utilise highly various techniques in trading, and for that reason, no common rule for identifying the optimal leverage ratio for an experienced trader exists. Despite that, for investors who intend to maintain a position long-term, 10:1 ratio might be the highest serviceable value.

In brief, newcomers should opt for brokerages that provide the lowest min leverage with the highest customisability. Having this setup in place, it’s possible to gradually augment the leverage, together with the development of skills.

Forex Trading Platform

The online galaxy of Forex trading conducts its activities mostly via a trading software. To secure a reliable trading environment, a trading platform with the highest levels of automation, where human interference is diminished to a minimum, is your glass of trading beer.

The nitty-gritties of trading platforms are provided in the questions below:

  • What should the trader Sonya seek when selecting a trading platform?
  • Does the platform provide for a broad set of technical indicators and charting tools for assessing price action?
  • Is the platform’s interface clean and intuitive?
  • Are there financial news?
  • Because Sonya may spend considerable amount of time checking out charts and graphics, is the platform’s appearance physically relaxing and soothing to the eyes?
  • Are the broker’s servers dependable?
  • Did Sonya encounter any connection issues in the midst of something important while browsing the demonstration account?
  • What’s the width of the spreads throughout news releases and market volatility?
  • Is the platform frequently updated and are bug fixed regularly?
  • Can Sonya customise the platform to address her specific trading needs? What about languages?
  • Are misquoting and slippage an issue?

It goes without saying that newbies would derive immense benefit from a well-maintained, easy-to-use, and uncomplicated trading software. However, seasoned traders will also greatly profit from an advanced and well-forged trading platform that lessens stress to a minimum.

Customer Support

Even the most ideal software is susceptible to faults. It has always been and it is going to do so in the predictable future. When such issues, faults, or delays occur, one should head to customer support.

A customer service, which epitomises a helpful, patient, and friendly attitude, can immensely aid users when used appropriately. Sometimes, the customer support is even conducted by people with heaps of knowledge of economics, finance, and trading. In those cases, one can even progress her/his expertise by asking the right questions.

Pay our reviews a visit to acquaint yourself with the customer service of the top-notch brokers. Picking a brokerage just because its customer support is brilliant might not be sufficient, but that could positively be a decisive factor.

Types of Trading Accounts

There are brokers and brokers. Some love crafting numerous account packages, while others prefer just a few with lots of options for customising. As a whole, the account packages’ number is not vital as long as the FX firm permits various adjustments when it comes to margin prerequisites and leverage ratios, appropriate for the necessities of traders, stemming from various backgrounds and at a different level of experience.

Array of Currencies Offered

Of course, it is a wise idea to opt for a brokerage that provides the broadest set of tradeable currencies. When assessing the accessible currency pairs, trader Sonya should strive to ensure that various pairs of different classifications exist, rather than just focussing on their total number.

For instance, if a Forex corporation is providing an offer of four pairs of the largest economic powers, four pairs of emerging countries with volatile currencies, four pegged or fixed currencies, and four rare pairs (Indonesian Rupiah, Indian Rupee, or Saudi Riyal), then this offer is much better than that of a brokerage, which provides 16 pairs and all of them are from developed countries.

These details are of particular significance for the seasoned trader. The newbie investor can concentrate on the more significant, fundamental elements of the broker’s offer before delving deeper into the currency pairs.

Conclusion

When browsing our broker reviews, you will discover a good percentage of the most secure brokers in the Forex galaxy, scrutinised by, more or less, every section in this post. We have invested every effort to ensure that our valuation is as realistic as possible, so you can construct an independent, yet well-informed, decision in line with your specific purposes. Irrespective of your decision, we’d like to wish you heaps of success in your new but truly exhilarating career.

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