In order to have the best chance of enduring a pleasant trading career and getting the best profitable results, you need to go through a correct forex broker guide before you open a forex account with a reliable, dependable, trustworthy broker. Without a decent broker, as a trader you could end up very disappointed and regret getting involved with Forex trading.
Not all brokers are the same, nor do they all offer the same advantages and some of them are not properly regulated. This is why it is extremely significant that you find the most reliable and recognized broker. You must undertake some research and understanding about the various brokers available and then decide which one deserves your deposited funds. Before settling on a broker, ensure that the following points are addressed.
Is the broker properly regulated and registered?
Not unless your desired broker is properly regulated should you consider getting involved with this company. Take for example the USA. Every broker must be registered with the NFa brokers. One that is not registered with the financial authority is a broker to avoid. Brokers in the USA are subject to NFA and the CFTC’s regulations and laws. Each country is under supervision and regulation of its own system. Brokers that are under a roof of strict regulation and are registered with a legal institution are good options to work with, however do not let this primarily lead you to make your final decision.
Business and financial standing
One of the world’s main concerns today is the economic crisis. Regarding this, you should follow the forex broker guide and choose a broker that proves to have a leg to stand on even in this type of economic situation. Broker firms offer a high leverage, usually presenting the trader a maximum of 99% of the funds required for them to trade. Consequently, the broker you settle on must be connected to a firm that has sufficient capital because if they are not then the broker could suffer the misfortunes of the world’s economic crisis. Only if you feel your chosen broker has a strong business and financial standing, should you consider them an option to trade with.
It is advised not to get involved with broker companies who are not registered with the Federal Deposit Insurance Corporation (FDIC). If for some reason there is a chaos in the market, there is no fortunate way of regaining your losses. This is another reason additionally as to why you should select a broker that encompasses a liberal amount of capital enough to endure the chaos of the market.
Does the broker offer you the needed trading fundamentals?
Forex markets are running 24 hours a day, 5.5 days a week. Each trader has his individual preferences of whether he wants to trade via email, telephone or through a live chat online. Make sure your broker operates under a reliable legal system to ensure you get a fast response from the broker. If you broker operates in the same legal system as yourself it offers you a few advantages in terms of customer support. Be sure to check where they are located, in order to save time waiting for a response from their support team and whether they offer support in your region.
Your broker should be able to offer you the ability to trade at any hour of the day outside or inside usual business hours. The broker must implement developed trading technology and trading platforms that actually enable you to trade 24/5. The firm should also be able to offer you customizable trading software or Expert Advisors. Seen as the Forex market is rather volatile and complex compared to other investing markets, brokers should be able to deliver to you the trading fundamentals and tools to help you smoothly function and tackle through any market difficulties such as real time prices, up to date market news and technical analysis.
Does the broker offer suitable spreads?
It is advisable to be cautious of how much commission a broker demands off you. The only commission charged in the Forex market is the spread. The spread is the difference between the bid and ask price (amount paid to buy vs. amount sold of a currency). Different brokers offer different spreads; variable spreads or fixed spreads. The broker that offers fixed spreads is the most recommended as they give you the opportunity of predictability. Irrespective if what form of spread you choose to trade with, choose a broker that a competitive spread to give you a better chance in making a profit from your trades.
Are all trading accounts offered?
Every broker should be able to offer a standard trading account, a micro trading account as well as a demo account. A trader should have the opportunity to decide which account to use. A demo account is a necessity for a trader, therefore a broker that cannot offer one is not recommended. A demo account can enable the trader to gain as much practice as he wants in the Forex market. It allows the trader to use the broker’s current trading platform so as to become more acquainted with it. However, a demo account should only be used keeping in mind that you are using virtual money not real money. It is important that the trader does not believe that whatever goes on in the demo account will happen in a real live account. This can be disastrous for a trader once investing with a live account because the standards and factors are entirely different. For example, in a live account, you will lose funds, and in a demo account, you cannot. Your trading mentality will significantly change once moving to a live trading account.
Choosing between a standard account and a micro account
Usually, brokers offer a standard trading account that allows a trader to trade currencies in standard lot sizes of 100,000 units. Take this example; when you want to buy €200,000 worth of trading volume, having a standard account will allow you to do so with an investment of €200. This is with a leverage of 100:1 where 100,000 x €200 = €200,000. This means that trading this small investment is now possible rather than the large investment of €200,000 which would be required if there wasn’t the option of a 100:1 leverage from the standard account. However when using leverage it is extremely important to use risk management in order to prevent you from losing funds and increasing your chances of increasing profits.
Micro accounts are an advantage for average or new traders. Unlike a standard account, a micro account enables a trader to trade in small units such as 10,000. In general, a micro account allows you to open an account with the small amount of $50 and the maximum amount of $10,000. It is advised to use a micro account to gain trading experience until you realise that your balance is surpassing that maximum amount, and then it is time to open a standard trading account.
Are you aware of the broker’s margin call policy?
High leverage is referred to as a ‘double-edged sword’. This is because high leverage can land you huge profits but at the same time land you huge losses. In order to help reduce the risk of losses, brokers should provide a margin call policy. This margin call asks you to back up any potential losses. Therefore be fully aware of this margin call policy when choosing a broker.
Does the broker offer a respectable customer support service?
A decent customer support service in a Forex broker company is greatly needed. In order to test and investigate a specific broker’s customer service, you should use a support ticket, send an email with inquiries or use a live chat service. Depending on the timeliness and manner of their response, it can indicate what kind of customer support service the broker has.
So, once you have concluded with the forex broker guide and have decided on a suited Forex broker, you only have to open an account by filling out an application form regarding personal info, financial status and trading experience information. A passport or ID will be required by your broker so as to verify your identification. Getting started with a broker will allow purchasing newsletters, training videos, free tutorials and even live webinars in order to get you more acquainted and trained in using their trading platform.
Having read the most vital points of the forex broker guide when choosing a broker, we hope it helps you to find a broker that you will be pleased with. Remember to only settle on a broker who is regulated, trustworthy, that is of good reputation and that has a long lasting business and financial standing. Confirm before you choose that the spreads, leverage and types of accounts are suitable enough for your trading career. We wish you the best of luck in the search of your broker and throughout your forex trading career.