In online trading, the first step is to find a forex broker. Now, who is a broker? A broker is a person who acts as an intermediary between an investor and a securities exchange. There are two types of brokers: regular brokers who deal directly with their clients and broker-dealers who act as intermediaries between the client and a larger broker.
Regular brokers generally are held in higher regard than broker-resellers. This is not to say that all resellers are inherently bad. You merely need to check them out before you sign up.
To choose the right forex broker, you should do the following:
Research through the internet forums and news, use search engines and other independent sources to collect all possible information about your potential broker. But remember that many people waste their time chatting and repeating rumors that are often untrue. Read online reviews about your chosen website or broker to learn more about other people’s experiences.
A company’s website should be reliable and decent. The website’s wording and use of language should be grammatically correct. It should deliver a large selection of study-texts, an FAQ page and a simple navigation system. The “About Us” page should be detailed and cover all necessary licenses and permissions.
The Contact Us page must show the company’s addresses and contact numbers.
Study and read the contract very systematically, if your desire to profit from the market. It is highly unpleasant to win a fortune and then lose it, because you have missed important information while reading the contract.
Let us say that you’ve researched and selected 15 working brokers out of 50 and that they fit the standards described above. How would you narrow down the selection to one person?
First of all, you need to find out their trading conditions and then estimate the profit you might earn based on these conditions.
Figure out the answers to the following questions before choosing a broker:
- What are the trading conditions indicated on a broker’s website? Are they clear?
- How large is the range of currency pairs the broker offers?
- What instruments do they offer? What is the spread?
- Are there any further payments you have to make?
- Do spreads change? If they do, under what conditions do they change?
- Will the broker notify you about the change of spread?
- What are the necessities applied to margin leverage, deposit, and swaps?
- What will happen in the case of unpredicted advances?
- Are there any money transfer fees and what are they?
Unclear or uncertain trading conditions are the cause of mistakes and problems, which will possibly lead you to lose your investments. You would be well advised to cross out such a broker from the list. You need to care about your safety first.
After looking at the security and profit aspects of the brokers, you’ll have only two or free brokers left on the list. To limit the list down more you need to think next of your personal comfort.
- How can you withdraw your money with this broker?
- What trading applications are available? Are they consistent? What are their structures?
- Does the forex broker have limited working hours or can you contact them 24/7?
- What languages are supported by your broker? Can you communicate with each other efficiently?
Use as many factors as you need, and be really selective until you end up with just one broker who fits the bill 100 percent. Only then can you start working with your chosen broker.