The foreign exchange market is the world’s largest financial market, with a daily turnover of more than $ 5 trillion. Despite its size, the market does not yet have a central exchange where foreign exchange dealers trade. Instead, foreign exchange traders must conduct trading activities through intermediaries (foreign exchange brokers).
This shows the importance of the role of the broker in the trading process. When choosing a broker, traders can choose from thousands of Forex brokers on the internet. But the real question is how you determine if the broker you choose is suitable for your trading needs.
To help you with the broker selection process, we have prepared a guide that lists the key factors you must consider when choosing a broker.
Security
The first feature that a good broker must have is a high degree of security. After all, you don’t just give large sums of money to people who claim to operate legally, right? It is not difficult to check the credibility of the broker. There are regulators all over the world. They will distinguish which are credible and which are fraudulent. Before giving money to a broker, find out if the broker is a member of the aforementioned regulator.
Countries with financial regulators supported by strict regulatory enforcement include:
- Australia (ASIC)
- Eurozone (Mifid and local regulators)
- India (SEBI)
- Japan (FSA and JSDA)
- Switzerland (FINMA)
- United Kingdom (FCA)
- United States (CFTC and SEC)
Deposit and withdrawal
A good business platform person can allow you to withdraw profits without difficulty. There is no reason for the brokerage platform to make the process of withdrawing profits difficult.
Beware of illegal brokerage companies
Illegal brokerage companies are fraudulent brokerage companies that only record customer orders and never execute transactions.
Trading platforms and software
Since the trading platform is your gateway to the market, you need to make sure you can rely on the trading platform you are using. Most brokers will offer traders a range of alternative trading platforms. In most cases, trading platforms are provided by third-party trading solution providers. Still other brokers have started to develop their own proprietary trading platforms in an attempt to distinguish themselves from other brokers in the industry. Often, these proprietary platforms are the best trading platforms because they are specifically designed by the client base of the broker.
However, a good broker should be able to provide a good platform choice. This is because some traders prefer to trade from a desktop computer, while some traders prefer to trade using a smartphone. It is worth noting that the most common trading platform you will find among different brokers in the industry is the MetaTrader 4 platform. It is estimated that at least 85% of brokers in the industry use the MetaTrader 4 platform. So this means that it is very likely that this is one of the platforms you will be using.
Commissions and spreads
Unlike other traditional financial markets, this market operates mostly with spreads rather than commissions. That’s why most brokers advertise their services as commission-free.
Customer service
Most beginners often forget to consider customer service when choosing a broker to register. They may not realize the importance of customer service in their overall trading experience.
Check if there are multiple ways to contact customer support. Most brokers will provide their customers with multiple ways, such as email, live chat and phone calls, so that customers can contact customer support. In short, you don’t want to spend countless nights worrying about how your broker will handle your problem.
Additional features
Take a look at the features provided by the trading platform.
Comprehensive charting package
Extensive technical indicators
One-click trading on the trading platform
Risk management tools such as stop-loss orders and trailing stops.
Although all of these may seem trivial at first, they will later play a vital role in ensuring that you enjoy a seamless and efficient trading experience.
But in terms of platform selection, this is really a matter of personal choice. Most of these platforms will have the same basic functionality. The best way to find out which platform is right for you is to try it out with a demo account provided by your broker. For those who do not offer demo accounts, they may not be worth considering.
