How to Choose Right Broker for Forex Trading

Choosing a right broker can save you from many troubles and help you avoid scams and hustles. But how to select a right broker for you without believing in any biased opinions? Well, here are some of the features that you need to look for in a broker before trusting them. Let’s look at those features in detail.

Is your broker regulated?

Broker can be of many types- individuals, institutes or group of people. Obviously, they all have nice looking websites and big portfolios, responding customer support and much more. But how would you figure out that the claims they’re making are actually true.

• The answer is simple- check if your broker is regulated by some major financial authority or not. Usually, brokers claim they’re registered and regulated by some big banks and institute. But you need to see their license and cross check their registration on some of the major regulatory authorities like Futures Commission Merchant (FCM) and Commodity Futures Trading Commission (CFTC).

However, there are different regulatory authorities for different countries and states. Some brokers work in certain regions and some in others. So, make sure your broker is of your country. Like for South African counties, XM and Exness are considered to be the most safe and secure, while for UK, IG and FXCM are known as the best brokers.

Is your broker offering low spread?

Spread is basically a kind of transaction fee applied when you purchase and sell a currency on the spot. So, it’s basically a difference between bid and the ask price.
Different brokers offer different spreads so you need to choose a broker that offers low spreads. However, spread also depends on market conditions like volume and trading session.

Does your broker offer high Leverage?

If you’re a beginner and want to trade large volume, you need higher leverage to make more profit. Leverage is the credit provided by your broker to trade. Usually, leverage is represented as ration between two numbers. You may see a number like 200:1. This means, your broker will lend you $200 per $1 of your actual investment.

Taking leverage through margin account:

New traders who have limited balance should always check if their broker is providing leverage through a margin account or not. Good brokers also allow you to increase or decrease the amount you are ready to risk. Less leverage means lesser risk and vice versa.

Leverage provides you with an opportunity to earn more money with actually low investments. But make sure your broker provides negative balance protection.

Negative balance protection is offered almost all reliable and well-reputed brokers and it saves you from exceeding losses. if your broker doesn’t offer negative balance protection, it can create trouble for you if you lose all your money and your trade goes in loss. A good broker should offer negative balance protection.

Account types offered by brokers:

Forex brokers usually offer more than two types of accounts. These are called mini account, standard account and premium account depending on your capital investment. A good broker is the one who offers high leverage and low minimum deposit. Brokers like XM offer minimum deposit of $5 with high leverage. Standard and premium accounts offer even higher leverage but with large capital.

Is your Forex Broker offering fast withdrawal and deposits?
Different brokers come with different policies for withdrawal and deposit. There are two major concerns that can affect your trading and you would need to pay attention to them.

What are the payment options provided by your broker?

Good brokers should allow their users to pay through Credit Card, Wire Transfer, ACH payment or online platforms like Skrill and PayPal. Same is the case with withdrawal. If you do frequent deposits and withdrawals, you need a broker with no withdrawal and deposit fee.

Which trading platform is being used by your broker?

Right trading platform is the fundamental tool that ensures speed and efficiency of functions and features offered by your broker. Before choosing a broker, you should make sure that your broker’s trading platform is compatible with your type of trading. Usually, Forex brokers use MT5 and MT4 as their trading platforms. If your broker is using a good trading platform, you’ll see a simplified and easy-to-use interface. The more functions and details you see of a broker’s website, the more efficient platform he’s using. If you’re concerned about the trading platform, try out the demo account so that you can actually check functions of a broker’s trading platform. This includes orders type, buy and sell buttons and trading charts.

Broker’s attitude towards complaints

Since you can face many problems during trading, it’s important for you to choose a broker who offers active and responsive customer support. Other than that, customer support should be able to understand your problem and help you in a short span of time. to avoid such issues, you should choose a broker that belongs to your state or they have head office near your area.

You should also see the reputation of your broker and how they respond to your complaints. Like a demo account, you can make a demo call to your broker’s customer support and see how they respond to you.

Final Thoughts

Choosing a right broker is important for a successful trading career. These were some of the concerns that you need to check before you choose your Forex broker. If you have any queries, let me know in the comment section and I will be glad to help you!

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