Forex is a global financial market that offers traders unlimited monetary benefits. The success of a trade
is usually fully attributed to the knowledge and flexibility of the trader, yet, there is one more important component – Forex broker. Brokers give access to the Forex world; the quality of their performance creates the ground for the trader’s growth and development, allowing them to multiply their financial funds.
When looking for Forex brokers, users are bombarded with countless websites and offers, making the selection challenging and chaotic. How to choose a reliable Forex broker in the global pool of offers? Let’s follow the guide.
What Is a Forex Broker?
Although people initially take the word ‘broker’ for a human being, in reality, it is a financial services company that provides traders with access to a platform for buying and selling foreign currencies and other currency derivatives.
A Forex broker is an intermediary between the market and traders; it’s impossible to reach the trades independently, without the broker. Despite the choice of brokers online, choosing the right one seems to be rather difficult as it is important to consider their core aspects of performance. Let’s study them.
How to Choose a Forex Broker?
Forex broker creates a perfectly organized environment for trading, providing all the tools and knowledge the trader might require. A reliable broker is a reliable partner for comfortable and legally functioning trading.
1. Regulatory Compliance
Reliability is a fundamental characteristic of every Forex broker. Choosing a broker that adheres to the law is the key to a secure trading environment and financial safety. Although all of them claim law obedience, only a few can prove it.
The regulatory bodies acknowledged across the world are CFTC (Commodities and Futures Trading Commission), FINRA (Financial Industry Regulatory Authority), ASIC (Australian Securities & Investment Commission), FCA (Financial Conduct Authority), etc. Apart from globally recognized regulatory bodies, there can also be local entities.
Provided the broker is trusted by at least two commissions, you can proceed with their services.
2. Trader account Offers
Though every Forex broker is a pass to the trading world, they offer different account settings, which is important to consider before signing up with one.
– Bonuses and promotions
Considering a high level of competition between the brokers, they offer quite a few alluring options for new users, to let them get used to the Forex world pain-free. For instance, Justmarkets offers a $30 welcome bonus, thus, the first steps will be loss-free. There is also a chance to start a demo account or get monetary benefits for referrals. The more bonuses on offer, the more pleasant the initial trading period.
– Leverage and margin
Leverage enhances the chances for profits. Leverage becomes available with a specific margin size. For instance, 30:1 leverage allows a trader with $1000 to hold a position that is valued at $30,000. Put simply, leverages help to magnify the profit. Yet, the leverage should be considered with a constantly positive dynamic of trends, as the losses can instantly ruin the whole trading gains.
– Commissions and Spreads
Commissions and spreads make the profit of brokers, thus, it is important to read all the conditions. Some brokers charge a specific percentage of the spreads, while others simply make wider spreads without charging the commission.
– Initial deposit
The starting deposit depends on the broker, often the trader can start with even $50. There can also be mini, micro, and standard accounts with correspondent requirements.
– Payment requirements
Each broker has their own funding and withdrawal policies, as well as the paying systems and commissions. Getting to know all the details is a matter of a net profit you get at the end.
– Trading platform
There are two platforms the brokers may offer – Meta Trader 4 and Meta Trader 5. While both support Forex trade, Meta Trader 5 offers a more intuitive layout and more trade opportunities.
3. Trader-centric approach
A trader-centric approach is about creating a comfortable trading environment for every new service user. The broker to work with is always willing to help, thereby, there is a non-stop customer service, whose assistants can help resolve issues on-demand. Customer service responsiveness builds trust in the broker and a long-term partnership.
Another important feature is the educational materials that provide all the informational support regarding trades, providing traders with a single source of truth.
The Bottom Line
Forex trade is one of the most stable forms of financial investments; it allows users to make a long-term profit by exploiting the instabilities of the global economy and geopolitics.
While knowledge of the trade is one of the core features for successful trading, a reliable broker is key to a safe and secure trading environment. Study all the available options, their offers, and their characteristics, to ensure the safety of your finances.