Forex trade market is very competitive, but frequent changing of brokers will make it only more harder. Before you take the leap into Forex market, you must consider your goals, trading strategy, capital flexibility, and more.
Moreover the broker you select can also affect your trading success. Therefore, you will need to make sure that you select one of the best Forex brokers,for achieving long term success.
Criteria to consider while selecting Forex brokers:
Foundation strength & security level
Before signing with an online brokerage platform, it is wise to check the foundation strength and security level. You are going to make significant deals with the firm, as they claim to be legit. To get an idea of the broker’s credibility, you will need to check with regulatory agencies from your country.
Basically, all the Forex brokers offer 100:1 leverage. This is a huge leverage, so make sure, which lending institution is supporting the brokerage platform, and the strength of the foundation, before you sign up with them.
Authenticity & legality
Forex brokers are growing in numbers online, so it becomes essential to check the legitimacy of brokerage platform, prior signing a contract. It is mandatory for each FX broker to get registered with FCM (Future Commission Merchant) and be regulated by CFTC (Commodity Future Trading Commission).
In addition, check the potential broker’s website for extra financial information. If you don’t find anything, look up their parent company website. If you don’t get enough info there, then it means a red flag.
Resources & spreads
Due to competition, you get the advantage of wide variety of services. Actually, the real game takes place on the trading platform. This needs to be tested and appraised, in advance.
The platform needs to compete with latest market standards including live news, updated market data, integrated technical analysis tools, real time charts, and more. Make sure that you look for more, because it certainly will make a lot of difference.
To appraise their offering quality, you need to compare their spreads. Every time you make a trade, there will be a commission, and Forex brokers earn money using spreads.
What is a spread?
It is the difference between buying and selling a currency. It is advisable to opt for a Forex broker with small spreads, because this ensures the traders of maximum profits. However, it is not the only choosing criteria.
Account types & leverage flexibility
The types available include Mini, Standard, and Managed trading accounts. Your selection of account type will depend on your trading needs, capital, and more.
Leverage flexibility allows a Forex trader to earn thousands with as low as $600 balance in their account. Large leverage means great risk, but traders with limited capital can opt for this, because it increases their opportunities. Alternatively, traders with unlimited capital need to go with low leverage option. Make sure the brokerage platform offers different options to suit your needs.
Forex trader basically uses the broker’s money (leverage is loan), so he does not have total control over the transactions. Risks taken on funds belong to the broker, so it is that company that decides on the amount of risks to be taken.
If the margin rules are strict, then trader can encounter a sharp decline. Even before you get a chance to make profits, the broker makes the margin call. This will result in significant losses. Therefore, it is vital to make sure that the Fx broker’s margin rules are lenient.
Emotionless trading features
Emotions have no place in Forex trading, especially while using the stop-loss & take-profit features. Follow this rule stringently, and never deviate from your strategies. Majority of trading platforms provide these features to ensure successful trades.
Traders also need to check other features like, the deposit and withdrawal process, if trading platform is user-friendly, and customer service, especially the after-sales support.