Steps to Choosing the Best Forex Broker
The foreign exchange market is the most heavily traded market where every day trillions of dollars are exchanged. One of the most important steps in succeeding in Forex trading, though, is to choose the best Forex broker.
Unfortunately, traders are left on their own, and have to choose the right broker themselves. Considering there are hundreds, potentially thousands of Forex brokers out there, choosing the best broker isn’t exactly the easiest task.
Here are a a few things to consider when choosing your next Forex broker.
Choosing an unregulated Forex broker is just asking for trouble. The country a broker is based in is also important since you want a broker located in a country where protection is given to traders, rules are followed, and the legal framework is strong.
For example, a broker operating in the US and UK is more likely to comply with all rules and regulations compared to brokers located in less industrialized, second or third world countries. It’s also important to consider the specific regulatory agencies who license and regulate the broker. Just because a broker is regulated doesn’t mean they’re perfect!
Available Trading Platforms
For many traders, the types of trading platforms the broker offers its investors for executing trades is critical. The trading platform is where all the action takes place, so there are a few things to consider and questions to ask yourself.
Do you prefer downloadable platforms, or ones that are web-based? Do you prefer simplicity over diversity? Do you want a platform that’s attached to a community, such as eToro’s platform? What specific features do you know for a fact you want in a platform? Execution speed? Specific technical indicators?
Ask yourself these and other questions to help gauge your interest in using a specific broker.
The amount of leverage a broker makes available to clients is another crucial element to take into account. If you’re trading a small amount of capital, then you’ll want all the leverage you can get your hands on.
Traders based in some countries, such as the US, will also probably want a broker offering large levels of leverage since the maximum US brokers are legally allowed to give to its traders is a measly 50:1. Other brokers offer leverage that goes up to 1000:1. But if you have a large trading account, or plan on using a conservative strategy, then leverage should not be a pressing issue.