How to choose the best Forex broker

If you are a forex trader, and especially a beginning trader in the foreign exchange market, you probably have heard about microcurrency trading, a trading type involving trading currencies in 1000 units lots. But do you just join and sink your teeth deep into the Forex trading world? Unless you already have the forex trading expertise, which is rare for new forex traders, you will ultimately need a forex broker. And there are dozens of forex brokers in various online platforms looking to win your business. If you visit any financial news website, the chances are high you will find overwhelming internet advertisements from forex brokers.

But how do you know an online forex broker suits your interests? Don’t worry. This insightful piece highlights what to consider when selecting the best forex broker for you.

Account features

Different forex brokers come with varying account offerings. So, when comparing features among different brokers, make sure you consider the following four areas;

  • Commissions and spread

Usually, some forex brokers taking commissions might charge a particular proportion of the spread. And most often, it differentiates a forex pair’s bid and asks. Conversely, most other brokers charging no commission earn with wider spreads. Therefore, establish how your broker earns from you.

  • Leverage and margin

Sometimes forex participants may access leverage available in their margin account. But this mostly depends on the broker. For instance, as a forex trader with a $1000 account size, you can hold a position valued at $50,000 using 50:1 leverage. And that’s just a tip of a forex trading iceberg as some forex brokers offer traders as much as 200:1 leverage. Now, leverage often functions in a trader’s favor with multiple winning positions, significantly enhancing the potential for profits. However, it would help to be cautious because leverage can quickly destroy your account because of the equal magnification of the potential for losses.

  • Initial deposit

Usually, most forex accounts are fundable with a minute initial deposit. The deposit can go to as low as $50. And with leverage, the buying potential is much more significant than the minimum deposit. This concept makes forex trading an attractive alternative to new investors and traders.

  • Ease of withdrawals and deposit

Forex brokers feature various specific funding and withdrawal policies. They may allow you to fund your account through ACH payment, credit card, wire transfer, PayPal, personal or business check, or bank check.

Regulatory compliance

When choosing a suitable forex broker, reputation should be the initial thing to check. The U.S. considers a reputable forex broker as one who is a National Futures Association member. NFA is a self-regulatory firm for the futures sector. Beware of flashy forex broker websites as they are not always guaranteeing that the brokers are NFA members under Commodity Futures Trading Commission regulation. The recommendation is to check a broker website’s “About Us” section for its NFA member number. Other countries outside the United States of America feature their regulatory bodies.

Trading platform

A trading platform is usually the investor’s portal to the markets. Therefore, it is essential to ensure that a forex broker’s software and platform integrates the fundamental and technical analysis tools you need. You should also confirm the ease of entering and exiting trades in the trading platform. For example, a well-constructed trading platform will feature clear sell and buy buttons. Some advanced platforms even have a “panic” button for closing all open positions. The consequence of a poorly-designed interface is the possibility of costly order entry errors.

Customer service

Convenience is a key factor in participating in the foreign exchange market. Why? Because this investment type occurs 24/7 meaning that you should access a forex broker’s customer support services at any time. Additionally, it would help to consider the ease of getting a live individual over the phone. A fast call to a forex broker can improve your overall idea of the customer service type they offer without forgetting average wait times.

Bottom line

Having confidence in your forex broker helps you devote more attention and time to developing and analyzing forex strategies. Thorough research before fully committing to a broker has long-term benefits as it can increase your investment success odds in this competitive forex market.

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