5 Steps To Take Choosing a Forex Broker
Updated: Mar 2, 2021
The retail Forex market is a growing industry and new brokers are popping up on a regular basis. Choosing a Forex broker can be a difficult task alone just because of the sheer amount of brokers offering similar services.
In this section we're going to discuss the steps you should take before choosing a broker.
1. Security
When you look to open a new bank account you always make sure that the bank is regulated, has good reviews and is secure overall. This is no different to choosing a broker. Luckily, there are regulatory agencies all around the world which enforce regulation to make sure they are up to standards with what consumers want and to make sure they obey the law.
Below is a list of countries with their corresponding regulatory bodies:
Before choosing a broker always check this step, if they are not regulated under an agency they may even be operating their business illegally!
2. Transaction costs
Transaction costs can be a determining factor on whether you are profitable or not. Many systems are profitable without commission and spreads over the long term, but once they are added in they drop.
When you enter trades through a broker you incur a transaction costs, this is in the form of commission and or spread. Looking for the most affordable commissions and spreads is a go to. The increase in competition now has been beneficial in this aspect, most prices are quite competitive and relatively stable. Some brokers are now even offering ECN solutions which try keep spreads as low as possible and charge low commission.
Remember though, make sure the broker is secure and then look for the best costs. Low costs and low security mean nothing when they run away with your money.
3. Trading Platform
When you execture your trades they are normally done through the platform your broker provides. Therefore, having a user friendly and easy to navigate platform is a must. Many MT4 platforms make it very difficult to execute trades, find charts and calculating risk. Why go through the hassle when the platform can do it for you? Most cTrader (Spotware) platforms are very easy to use and having advanced charting tools and even algo writing stations.
At Logikfx we think beginners have a good time navigating around FxPro's platform, they fulfil all the steps for a good broker and also offer free extra services which is a plus.
4. Execution
Your brokers must always try to fill your trades in the designated price or the best possible. In most cases when the markets are stable with liquidity the broker should allow instant orders to be executed as soon as you place the trade. If they do not do this then it could reduce the amount you profit from and even place you in a trade you do not wish to enter at that price.
This is less of an issue with long term traders but can still affect profitability so make sure their execution is on point.
5. Customer Service
When you come across any problems such as how to deposit money, how to use software, where to find certain tools and so on the broker is the go to organisation. This is because they are the one handling all these issues. Therefore, when they deal with these issues they should make it easily accessible to contact them.
What you should look for in brokers with good customer services is:
Fast email replies
Online Instant Messaging
Phone numbers
Lingual speaker
Hopefully this has helped you as a new retail trader looking to enter the Forex world.
