A novice trader needs to find the right approach to choosing a Forex broker, as this is directly related to his financial well-being and trading success on the currency exchange.
You can take the first steps in Forex trading with any brokerage company, since the acquaintance with trading begins with a demo account in general. However, when the first experience is left behind and the novice trader wants to start real trading, invest and earn real money, he already faces the question of choosing “his” broker.
There are a lot of advertising of Forex brokers offering fantastic trading conditions and prospects, but the question remains “how to choose a reliable one?”.
An honest broker with a good reputation, providing a stable platform and high-quality orders execution, guaranteeing a fast withdrawal of funds - this is a small list of qualities that a forex broker needs.
The characteristic features of a good forex broker are:
- good reputation;
- comfortable trading conditions;
- reliability;
- time of operation in the Forex market;
- affordable and competent technical customer support;
- order execution speed.
The choice of a forex broker should be based on the main criteria below:
- extensive experience in the foreign exchange market;
- mandatory availability of a license regulating its activities;
- a large selection of accounts, allowing the trader to choose a suitable option, depending on financial capabilities;
- providing customers with the software necessary for successful trading;
- providing safe and fast money depositing and withdrawal;
- allowing traders to make transactions with a minimum deposit;
- issuance of loans for transactions;
- competitive spread size;
- providing comprehensive support to clients and the ability to resolve conflicts and disputes;
- a large selection of tradable currency pairs.
Rules for choosing a reliable broker in the foreign exchange market
1. Company registration
Obviously, a broker which has the appropriate registration is always trusted, more than a company registered in it is not clear where. There are cases when brokers with registration in the Cayman Islands impersonates a large European company. It is not recommended to deal with brokers with a central office in offshore countries. Such companies, as a rule, are not aimed at conducting honest business. Undoubtedly, the broker’s address and phone number corresponding to the registration should be available.
2. Licensing of activities
In the absence of a license to conduct investment and brokerage activities a trader just needs to look for another broker. A license can be compared to a person’s identity card. After all, usually when entering into a business relationship with a person, we always strive to obtain reliable information about them. The forex broker’s activities should be under the control of regulatory countries, and the fact of a license is one of the main signs of reliability.
3. Control and audit
A company providing services in the Forex market is obliged to regularly undergo audits in accordance with the specified rules. Regulators, in turn, must exercise control over its work. Reliable, serious organizations value their reputation, observing all established requirements.
4. The time of existence
Despite the fact that new companies can meet all the necessary parameters and requirements, nevertheless, it is better to opt for a forex broker which age exceeds 2-3 years. It is clear that past merits do not guarantee future successes, but, nevertheless, older brokers are more credible than new ones.
5. Statutory fund
It is preferable to choose a company for cooperation with a large authorized capital. It’s not sensible to be calm for a deposit of 10 thousand dollars in a company when the entire authorized capital is one thousand dollars.
6. Reviews
All Forex brokers’ customer reviews, especially negative ones, instantly get on the Internet. It will be absolutely correct to get people's opinions about the company. Enthusiastic opinion should be treated critically - everyone knows about custom reviews.
Trading conditions
1. The minimum deposit
The minimum deposit that must be made to your account before starting trading on the foreign exchange market. Traders just starting to trade currencies should pay attention to accounts with low deposits. Such conditions are offered by many forex companies. If desired, you can open accounts from $1, to train trading on a real account, a deposit of 3 to 5 dollars is quite enough. At first, such a sum is not scary to lose, but it will pay off with acquired skills and knowledge and will allow you to switch to accounts with a large deposit size.
2. Trading platform.
In addition to MetaTrader4, other forex trading platforms should be presented at the forex broker. Although, it all depends on personal preferences. It happens that traders refused to cooperate with a reliable broker due to the lack of MetaTrader4, which they are used to.
3. Software. Do not ignore the software issue. The wide choice offered by the broker will undoubtedly be a plus in its favor. Despite the fact that the computer is mainly used for work, the availability of applications for mobile devices will allow you to control transactions through the phone, and, in addition, will free the trader from uninterrupted stay in front of the monitor, tracking the movement of quotes.
4. Spreads, swaps, commission - direct expenses of the trader.
It is desirable that they be minimal, so the choice of a good broker is due to these parameters. Naturally, the smaller they are, the better. You need to look at the size of the spread that the company takes as a mandatory commission for the services that it provides in the Forex market. It is good when the spread is fixed and amounts to 3 or more points, which depends on the currency pair. You should start trading on Forex with a minimum, 1-2 points, spread, minimum deposit, which will make it possible to gain experience and practice trading currency in order to earn money in the future to reach a new level of trading.
5. The method of order execution.
The execution time of trading orders is one of the conditions on which you need to stop closely when choosing a broker. It is unlikely that a broker that offers an order execution time of more than 10 seconds will interest anybody. In fact, during this seemingly negligible time the situation in the foreign exchange market can undergo drastic changes. It is better to spend extra time and find a broker with instant or short (up to three seconds) order execution. Serious brokers expose this data on their official websites. If you do not want to deal with requotes and slippages, then your choice is an ECN broker. Of course, it will not be possible to completely get rid of slippage - they are present in all companies. Moreover, if their value is from 0.5 to 1 point, then consider them as additional costs, however, if their value reaches 5 or even 10 points, the broker needs to be changed.
6. Technical customer support.
For those companies that do not care about their reputation, it is difficult, rather impossible, to contact technical support. A good broker will quickly, without the hassle, solve the problems that customers contact.
7. Leverage (leverage).
An important factor that helps in choosing a forex broker will be the amount of leverage offered by the broker. As an advertisement, some forex companies promise to increase leverage up to 1:300 or 1:500. The flip side of the coin will be high risks, remember this. For normal trading and earnings, a standard leverage of 1:100 in relation to the size of the deposit is enough. In principle, for beginners who are just starting to work in the Forex market, a leverage of 1:50 and no more is recommended. In this mode, beginners have the opportunity, without risk, to drain the deposit within the first day to master the intricacies of Forex trading. Indeed, with an increase in the deposit used for trading, the degree of risk also increases.
8. No restrictions on trade!
Any trader should be able trade at his discretion, in any volume and at any time.
Security
- Opening an account. A serious procedure that clearly requires verification of identity, namely, verification of identity and address of residence. It is suspicious if opening an account is limited to filling out forms on the site owned by the broker without downloading the necessary documents: copies of a passport, bank statement, etc. An honest broker will not open accounts in this way.
- Deposit/withdrawal of money. Convenience and speed of operations to replenish the account and withdraw money earned provide a comfortable interaction between the trader and the forex broker. Such scenario does not include a situation where a trader waits for his money for weeks.
- Deposit insurance. It would be quite useful to ask the company about insurance of customer accounts and the amount of insurance if the company goes bankrupt. This factor is important, but not essential.
- Education and training. It’s good if there is one, but on the other hand, teaching the basics of Forex trading is already in another area of activity.
Conclusion
There are many more nuances that cannot be ignored when choosing a forex broker. The overviewed recommendations are only the basis of the reliability of a brokerage company that provides trading services on Forex. In today's market you can find a large selection of companies that provide everything you need for successful trading. Each trader, depending on experience and financial capabilities, will have the opportunity to increase their initial deposits.
At the same time, you always need to remember that successful trading is the result of the traders’ right decisions and care in everything: from choosing a broker that meets all the requirements of the client, to conducting your transactions.
