Forex brokers play a major role in our forex trading. A Forex broker is an individual or a company which buys and sells orders according to the trader's(your) decisions. Choosing the right forex broker could be a daunting task. It kind of decides our fate with forex trading.
This Forex world is yet another place where we can find 'n' number of scams. This mainly includes forex brokers. There are many people who have lost money because of trusting wrong Forex brokers. It could be overwhelming for you as there are thousands of forex brokers providing similar services. How can you choose the right forex broker? There are few basic needs that a forex broker must satisfy in order to be considered.
Is the Forex Broker regulated?
This is the first thing you should check about a broker. In the United States, a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and a NFA member. The CFTC and NFA protects the public against fraud, manipulation, and abusive trade practices.
You can verify the broker information at NFA's website.
How is the forex broker's Customer Service?
This is very important because at times we will get doubts and questions on using the broker's services. We must be sure that the customer service is highly satisfactory. Check if they have
- 24 hour customer support
- many options of contacting them (phone,e-mail,chat etc)
- representatives with Good knowledge about Forex
- timely and prompt response
- courtesy towards the customers
Be sure to choose the right one as it your hard earned money that you are giving to the Forex Brokers.
The Forex Trading Software
Another key factor. Most of the brokers provide online forex trading and for this an exclusive software is required. Make sure that you are clear in using the software and also feel very comfortable with the software.
- You must be able to get all the required information (current account balance with realized and unrealized profit and loss, margin available, and any margin locked in open positions) in the main screen of the software.
- Make sure that you have the ability to view real-time currency exchange rate quotes.
It is better to have a demo account first. Study the and then go live with them.
Leverage,Currency Pairs,Trading hours,transaction cost etc
Make sure you are able to trade all the major currency pairs and most of the minor currency pairs. Know more about the currency pair and how to read them.
Check if the broker offers various Leverage options. Though there are many options, 100:1 is the best for standard account and 200:1 is the best for Mini account. As said before, Leverage can make or break you. So be careful, more leverage more money and even more risk.
Check if the broker is available during the active trading hours.
Instant automatic execution of your trade is a must. Check if the broker is providing this service. If not, he is out of the list right away as this is the most important factor.
Check if we can open an trading account for a minimum amount. The ideal amount for a beginner would be anywhere between $300 to $500. As a new trader, I would strongly suggest you not to invest more unless you are sure of your trading strategy.
Check if the broker offers low spread values. Lower the spread, more the saving for you.
Check if the transaction costs and rollover charges are reasonable.
Forex broker's review
Also check the current reviews of the forex broker from the internet. Also you can find a lot of help from forex forumns. Ask people how they rate their forex brokers. The pros and cons and then decide which one is the best for you.
These are some of the basic requirements that your broker must satisfy. in order to be chosen. I would strongly suggest you to first get a demo account from 2 or 3 brokers, about whom you have already done the background checks. Trade with them using the demo account. Call their customer service and ask silly doubts and check how they are handling you. Finally choose the one who you feel is the best for you.
Choose your broker wisely. Choose a forex broker who is suitable for your needs and not because someone asked you to. Do your ground work properly and carefully. Forex is a place where you are the boss and you have all rights to hire or fire a forex broker. Your money. Decide wisely.
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