As a forex trader beginner, choosing a forex broker is one of the key determinants of your success in this field. A forex broker provides a platform for traders to buy and sell foreign currencies.
You should make this decision based on your trading strategy and your goals in investing. Here are tips on creating your forex strategy.
As a beginner, you might get overwhelmed by the number of forex brokers in the market. Generally, the ideal forex broker provides three basic benefits for a beginner; first, they should be regulated and reputable, offer educational materials and provide accurate market research.
In this article, I will guide you on how to choose the right forex broker.
Table of Contents
Things to Consider When Choosing a Forex Broker
1. Regulatory compliance
Any trustworthy broker has an official regulator that promotes and protects the integrity of the trades. This ensures that traders are protected from fraud and manipulation. It is important to choose a forex broker who is licensed in your country to ensure the safety of deposits and the integrity of the broker. A well-designed website should not fool you; usually, a regulated broker has the credentials in the “about us” section of the website. You should also certify where the broker obtained the license from to inform you more about their reputation and history.
2. Ease of deposit or withdrawal
Brokers allow traders to fund their accounts online through credit cards, ACH payment, wire transfer PayPal, bank checks, or personal checks. Withdrawals are typically through wire transfers or checks. Brokers charge a small fee for providing this service. Before choosing a forex broker, examine their policies on deposit and withdrawal.
3. Initial deposit
Before choosing a broker, It is important to first decide the amount you want to invest. You can invest as low as $10 depending on the platform. Here is a beginner’s guide on how to grow your small account! Some brokers offer special rewards such as bonuses and promotions. This is a marketing strategy for these firms, however you should be careful before settling for such brokers. Top-rated brokers don’t feel the need to “sweeten the deal” for you.
4. Account features.
Some of the account features to look out for include leverage and margin, commissions and spread initial deposits requirement, and ease of funding and withdrawing. Brokers typically earn through commissions which means they charge a certain percentage of the entire spread.
Margin accounts give traders some leverage depending on the trading platform. This means that a 50:1 leverage of a $1,000 account can trade up to $50,000. Some brokers give up to 200:1 leverage. The more leverage a trader is offered determines their potential profits or losses from a position. As a beginner, use leverage carefully.
A broker that takes commissions may take a specified part of the spread. Spread refers to the difference between the bid and ask for a currency pair. Brokers that take no commissions make money through wider spreads.
It is also important to decipher the currency pairs traded on the platform. Many currencies are left out on these platforms. First, decide on your goals, then proceed to check the currency options available.
5. Customer service
The forex market is a 24-hour economy, therefore, your broker’s customer support should be available around the clock. It is also important to know whether there is an actual person on the phone. Make sure you get the average wait times and the nature of their customer service. You can get this information by simply calling in severally.
The bottom line
Choosing a forex broker is the simple part of this new endeavor. If you have clear goals and the determination to analyze and develop forex strategies, you will succeed in forex. Don’t be tempted to make more money in less time; set up various positions throughout the day and check your progress. Make use of various demo accounts available online.
Best of luck!