How To Choose A Good Forex Broker
How To Choose A Good Forex Broker
How To Choose A Good Forex Broker
1. Does the broker is the supervisory body? If so, by what country?
Not all countries supervise in the same way, or do not have the same rules at the time of registration.
That is why it is so important for every investor / trader in order to identify those countries where the company's Broker is under strict control, that is, those which are regulatory agencies that control their business. It is also important to know whether the broker is controlled and outside the country, because the latter tend to be more flexible when it comes to the requirements needed for registration.
Countries with a dedicated regulatory agencies:
* USA
* British
* Australia
* Switzerland
No matter what type of trader you are, you should watch that the broker was out of control (control of security impact on the recovery of our money and the proper clearance), and you understand the regulations that relate to the Forex market in the country in which it is your broker.
The list of regulatory bodies including the links located on the bottom of the article.
2. Is the broker is the creator of the market or ECN (Electronic Networks residents)?
Understanding the nature of a broker is always an important thing. There are currently two types of brokers:
- Creating market prices (market makers)
- Providing the best odds of buying and selling from their own suppliers (ECN), characterized by high liquidity.
The important thing is that the ECN will normally show the volume available to each trader's buy and sell orders, so the merchant knows exactly whether it is ready to enter the market. Creator Market price is usually determined by selecting the highest rate of purchase and sale, as well as created trader must accept the price.
3. How reliable is our Broker Trading Platform?
Depend on the characteristics of computer hardware and software, sometimes we can find an application installed on your computer is better than running on the web page (Java) or, vice versa. Understanding which type of platform is more suitable for us, it is crucial for the convenience of our trade.
Also, it is important to make sure that the trading platform does not crash either jams too often, particularly when receiving messages or just in those cases where the trader needs it most.Reliability platforms should therefore be more important than looks or tastes.
An aggressive trader or one who likes to trade frequently, it will always have to look strong and stable platform that never or very rarely breaks. However, passive and conservative investor who does not belong to those who do all the time watching the market, could be more flexible on this.
4. Compare the cost of trading.
You should be aware of all costs related to dealing with. Select it with one broker and compare with other brokers.
Included in the spread (difference between bid and ask price), costs / charges which are calculated on the north to the open position (ie points), and any other fees from transactions that had occurred.
For example, a broker offering spreads: 2 pips + $ 12.50 commission per trade is more expensive than the other offering a 3 pips spread for size, although at first glance it might appear otherwise.
However, you should pay attention not to the advertised low spread spread on one or two major currency pairs (majors), but rather, you should balance this with other pairs and have a general idea of the cost of the broker. In addition, brokers offering low spreads may re-enter the price (range spread), different from the original price, thus increasing transaction costs, they do it sometimes "invisibly" (eg post data / economic indicators).
Another important factor is to know what is the policy position of the broker concerning stop loss and limit (whether they are guaranteed). Depends on which player will receive the closing price, and this has an impact (apparently invisible) on the transaction costs (reducing profits or increasing losses.)
Also, the important thing for the players to be aware of how much volume can be traded in one transaction without having to open another position or even impossibility of trading. Trader is obliged to ask the broker for such information to have an idea of what is liquidity.
5. What is the actual volume of trade restrictions?
Players who place large orders might consider this point as extremely important. If their buying power exceeded $ 10 million once, you should definitely look for a company that has high liquidity and be able to guarantee full liquidity for their orders in most business situations.
6. Is the trading platform is really "user friendly"?
User-friendly during the trade, means that the opening and closing of the transaction will not take much time, or even better said, it should be done immediately.
The transaction with one click (after defining the standard size of the transaction), the management of stop loss, limit and other types of orders are used, traders should take into account.
This is a very important point for an aggressive player (day trader), which is much more dependent on trading platform than a moderate or a conservative player.
7. Is the broker also offers us some valuable services?
Real-time access to news and economic data are a must for any investor. However, we must also think about other things of value to our services offered by the broker, which we could support their decisions.
At this point, each player should carefully make sure that the company applies and meets basic standards for real-time charts, news and economic data.
8. Is the customer support is really good?
Troubleshooting the transaction should take place really quickly, you always have someone ready to help, and at the very beginning when a new trader, decided to open an account with a broker. Customer service should not only be able to solve the occasional problem, but it should help prevent them in the future.
This section does not distinguish between the different techniques for players of the game, for all is equally important.
9. Policy leverage and margin call
Players on the forex market are designed to the highest leverage and often choose a broker based on that trait. Be aware that high leverage increases the risks of trade. So, assuming the account also take into account that there are brokers who have agreed on a constant level of leverage, but there are others who are dependent on the trader's panic.
Players should also take into account the different policies margin call (margin call), they are brokers. Some apply the principle of FIFO (first in first out / first in first out), closing one after another transaction (or partially reduced) when the margin does not cover open positions, while others perform the principle of LIFO (last in first out / last in, first out) after the closing transactions become possible. Shall also apply to the third method - are being closed one after another the most leaky transactions (whether from the order of their conclusion.) Everything depends on the preferences of the player, but it is a matter which should be clearly considered before opening an account.
This is an important point for an aggressive player who often likes the highest possible levers, while the moderate or conservative trader would be happy with average levels of leverage.
Hope this article helps you on choosing the best forex broker for your needs
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