A Forex broker, or foreign exchange broker, is a place that provides a platform to buy and sell currencies. Currency pairs, such as EUR/USD (Euro versus United States dollar) and GBP/USD (British pound versus the United States dollar), are purchased and sold.
For beginner Forex traders, comparing Forex brokers can be overwhelming. The objective of this article, therefore, is to shed light on the key deciding factors for selecting a Forex brokerage.
A reputable financial institution will be regulated. Check to see if the selected broker falls under current regulations.
FP Markets, for example, is overseen by the Australian Securities and Investment Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC).
A credible Forex broker in the United States, on the other hand, will likely belong to the National Futures Association (NFA), a self-regulatory body for the futures market. The Commodity Futures Trading Commission (CFTC) is another well-known regulator in the US.
Before signing on the dotted line, thoroughly check the provider’s reputation. Research reviews, evaluate and find impartial appraisals. Naturally, there will be positive and negative results. But, largely you will want to see positive assessments.
Negative reviews can sometimes be unjust—poor understanding of the brokers’ procedures.
Ensure every broker has a physical address. FP Markets have offices in Cyprus, Australia and Dubai, all of which have verifiable addresses. Unfortunately, a disreputable broker will sometimes have no permanent address.
When you have found the best Forex broker that suits your requirements, only then proceed.
- Customer Support
Good customer support is imperative. If a problem occurs, response time is crucial. FP Markets have numerous awards in the field of customer service.
Clients generally accept issues arise; good customer service should then come into play and resolve concerns in a timely manner.
Most brokers have a live chat option, as well as email functionality and phone. It’s easy enough to check response time in live chat by signing up for a demo account. Before a broker has been hired, test customer service and ask some simple questions.
Does the broker respond professionally in an acceptable time?
- Forex Trading Platforms Available
Metatrader 4 (MT4) and MetaTrader 5 (MT5) are popular platforms and most reputable brokers offer mobile apps to allow ‘trading on the go’.
However, some brokers offer more variations: Iress, for example. Whether you’re a new trader or an experienced trader, this could decide which trading platform you select. In addition, depending on various brokers, each broker offers different account types.
Do thorough research.
- Currency Pairs Offered
Certain pairs get the most attention (major currencies or major currency pairs) and trade with high liquidity.
USD/JPY, USD/CHF, EUR/USD, and GBP/USD are some of the most common currency pairs. A Forex broker may offer a huge number of Forex pairs. Choose the ones that pertain to you.
- Account Application Time
Usually, account application takes no more than one working day. It can take longer, depending on background checks for live accounts.
Demo accounts are usually instant.
- Minimum Account Balance
FP Markets offer accounts with a minimum deposit of 100 US dollars, or equivalent. Depending on the broker you use, the amounts could be more or less.
- Date Established
If your selected broker has been established in the financial markets for an extended time, it should be easier to check their accreditation as opposed to a new broker.
With a new broker, it’s unlikely a track record will be available yet.
- Fees (Trading Costs)
Forex brokers will charge a commission per trade or a spread (or both), in exchange for executing buy or sell orders. Forex brokers make their money in this manner.
Spread is the variation between the bid and ask price (bid: sell price for traders – ask: buy price for traders).
Check the brokers’ websites; investing costs should be transparent. You should be aware of fees and commissions before trading with a live account.
- Execution Speeds
Is speed crucial? Faster speeds are essential, as sluggish execution time could cost money. Check the broker’s execution speeds on their website and test it for yourself.
The best Forex brokers offer fast execution times.
Average execution speed was 42ms and EUR/USD was 0 for 31.83% in October with FP Markets.
Whether you’re an expert or a newer trader, education and a good trading strategy are the keys to successful trading.
Check out the courses offered at FP Markets: https://www.fpmarkets.com/education/. Register for some informative live webinars https://www.fpmarkets.com/blog/category/webinars/ Here you’re free to ask questions and educate yourself simultaneously. The webinars are recorded.
Understanding CFDs, pips, margin and leverage, is important. When choosing a brokerage company, education should be a decisive factor.
FP Markets supports the education of its clients, providing superior interactive trading tools, calculators and charting software.
- Depositing and Withdrawing Funds
It’s critical to be able to deposit and withdraw money from a broker promptly and effortlessly. Ensure you check the types of withdrawal and deposit options offered by your broker.
It makes sense to look into the withdrawal period. Withdrawals can take up to a week with some brokers.
FP Markets offers various deposit and withdrawal methods: credit card, debit card and bank transfer, to name a few.
- Reasonable Leverage
The Forex market’s appeal to traders is partly due to leverage. However, there are hazards of trading with significant leverage: increases volatility on both winning trades and losing trades.
The majority of reputable brokers offer leverage ratios ranging from: 1:30 to 1:500.
Always read and understand the broker’s disclaimer; it’s there for a reason.