Forex trading is a great way to get acquainted with trading in general when just getting started. But a lot of people unfortunately end up losing a lot of money because they didn’t do their due diligence on a particular broker. Selecting the right broker can make the difference between earning a profit and losing money, not to mention weeding out the fraudulent ones. And while factors like tight spread and high leverage should always be considered, these criteria should never be the tie-breaker when picking a particular broker and platform. In this article, we’re going to give you a few tips on how to choose a Forex broker that’s right for you.
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Safety of Your Funds
Your highest priority when picking a Forex broker should be the safety of your funds first and foremost. You can’t afford to fall for a scam and have a fly by night “broker” steal your deposit. One of the best ways to prevent this is by going for a Forex broker based in the UK and subject to British financial regulations.
International Forex brokers in obscure jurisdictions have a higher risk of being fraudulent, or they may simply be impossible to pursue if you let one of their reps trade on your account and cost you everything. Look for Forex brokers that offer deposit protection, something regulated brokers in the UK can provide. This also means that if the broker goes broke, the government will bail you out. But besides UK brokers, brokers located in Australia, Ireland and the US are usually sure bets too.
Another tip is to vet each Forex broker’s reputation and financial situation. If you aren’t sure about a particular broker, you can research Forex brokers on a site like InvestinGoal. This site also has a wealth of resources for new traders. Learn which Forex brokers other traders are happy with and which ones are most used by successful Forex traders. You’ll be able to compile a list of reputable brokers and see which ones work the best for you depending on your particular style and needs.
The ease of making a deposit is irrelevant compared to the value of being able to readily access your funds. Determine how easy it is to make a withdrawal when you need the money or are concerned about the site. Note that even reputable Forex trading sites may charge you a fee to withdraw your money. Also try to go with brokers who allow you to deposit and withdraw funds through a wide variety of methods, such as PayPal for instance.
The Overall Cost versus Benefits
Forex brokers charge for their services, though there are different pricing models. The two main ones are “all in pricing” and “raw spread plus commission pricing”. The question of which one is right for you depends on the total trading costs you’ll pay and the triggering of resting orders. With an all-in spread pricing model, limit orders wouldn’t be triggered and stop orders would, while in raw pricing plus commission systems, your limit order is triggered and stop orders aren’t. If you trade with resting limits and stop orders, raw pricing plus commissions is better because you’re more likely to lock in your profits.
You should select a Forex brokerage that suits your trading style. You pay more to work with a dealing desk broker, but these Forex brokers often execute all trades up to a certain size instantly. If a Forex broker has a non-dealing desk, they include shipping if there is insufficient liquidity at a particular price. If you’re dealing with less commonly traded currencies, you probably need to select a broker with a dealing desk despite the higher price per trade.
Your Trading Style Versus the Brokerage’s Benefits
High volume traders should priorities fast execution and low costs of trading. If you trade based on long-term positions, then price stability and swap rates matter more than per-trade costs. If you’re utilising social trading, then it may be necessary to trade on a particular platform so you can truly copy their trades. If you’re striking on your own and developing your own trading models, then intuitive and easy-to-use trading platforms are better for you.
Customer Service
Forex trading takes place 24x7x365. When you’re comparing Forex trading platforms, look for sites with customer service available at any time. Furthermore, it should be relatively easy to talk to a live, qualified person, not just a chat-bot or being directed to an online discussion forum. Visit Forex trading forums to learn which Forex platforms are able to help users with complex problems and advanced questions, not just login issues.
Use the proper set of criteria when searching for a good Forex trading platform, and you’ll find one that is right for you. You cannot afford to go with a cheap service that ends up costing you a fortune.
