How to Choose a Forex Broker
Due to enormous competition between Forex broker-dealers, they offer different features and advantages. However, choosing a broker is not an easy task for any new or experienced trader.
There are some key aspects like regulation and capitalization which speak for the reliability and competence of the organization and which can be measured following certain objective criteria.
But the real challenge in choosing a broker comes when you have to determine what attributes you are looking for. Along with the outstanding features, you might find a potential weakness, depending on what you need for your trading style.
Here is the list of the questions you may ask yourself before choosing the broker for you
How reliable is the broker’s trading platform?
Depending on an individual’s hardware and software characteristics, one might prefer a desktop application or a web-based (java) application. Understanding which type of platform suits you best is critical for trading.
It is also important to make sure that the trading platform does not crash or freeze often, especially during times of global economic news or events, when traders needs stability. The reliability of a platform should be more of a concern than its look and feel.
An aggressive trader, or one who likes to make large, frequent trades, will always have to look for a stable platform that never or very rarely crashes. On the other hand, a passive and conservative trader who does not watch the market round-the-clock could be more flexible.
In trading terms, user-friendly means that placing an order or closing a trade can be done immediately. One-click trading and management of stop-loss, limit and other order types are advantages that a trader may want to take into account.
In addition, it is helpful for the overall navigation of a platform to be user-friendly. If a platform offers additional charts and tools, they should be fairly simple to access and apply.
This is a critical point for an aggressive trader (intraday/scalp) whose dependence on the trading platform is far greater than a moderate or conservative trader
Customer support One of the most imporant thing you should check in a broker is the support service. Forex is a 24-hour market, so ideally, the broker you choose should offer support at anytime. Does it has support in your language?
Which medium is used to contact the help desk: email, chat, or can you speak by phone to a live person? Do the representatives seem knowledgeable? How they respond to your questions can be key in gouging how they will respond to your needs in a real situation.
While trading you can run into technical problems. Therefore try to anticipate those critical situations and simulate those questions and requests to your broker. You can do this while experimenting on a demo account.
The website should already explain things clearly, but be sure to check the quality and efficiency of their support before opening an account
Many brokers offer two or more types of accounts. These can be very small mini-accounts and even smaller micro-accounts, or standard accounts, depending on the lots traded. A lot consisting of 100,000 units is called a standard lot; a lot consisting of 10,000 units is called a mini lot; and a lot consisting of 1,000 units is called a micro lot. Some brokers even offer fractional unit sizes which allow you to establish your own position size.
The micro and mini-accounts allow you to trade with a very low minimum of capital, while the standard accounts often require a higher minimum initial capital, varying from broker to broker.
As you see, the account types differ from each other according to the minimum trading size requirements. Choosing a specific account type should be relative to your amount of capital. This concept may seem a bit nebulous if you are just starting out, but rest assured it will be made clear once you start learning about leverage and money management
Is the broker offering any added-value services?
Easy access to real-time charts, news and economic data is a must for any trader. However, a trader must think of these and any other added-value service as part of the broker’s package rather than as the most important feature on which to base a decision.
This is a point a trader of any nature should address correctly to make sure the firm complies with the basic standards of providing real-time charts, news and economic events