Tips for choosing a forex broker

If you’re new to forex trading, the vast array of brokers available can seem overwhelming. This can make it difficult for new traders to identify a safe and competent broker. The goal of any forex trader is to make transactions that are valid, profitable, and with minimal complexities. For this reason, you should focus on working with a forex broker who you can trust with your finances and whose policies, strategies, and tools match your trading needs. To help you find your way through the maze of brokers available, this article will give you some key points to consider when choosing.

Compliance to Regulations

The money available in the financial sector attracts numerous scammers. So, to protect your finances from fraudsters, it’s important to select a forex broker that is registered with the regulatory body established in a country. While the regulatory standards vary from one nation to another, there are some basic benefits you’ll get from dealing with a regulated company. These protections include executing a client’s trades at market prices, keeping clients’ funds in segregated accounts, and ensuring enough capitalization in case of trading losses. Examples of jurisdictions with stringent regulation for brokers are Cyprus, Australia and the UK.

Enhanced Data Security

When you open a forex trading account, you must provide sensitive personal and financial information, including bank account details, credit card numbers, and copies of identification documents. If you deal with a broker that doesn’t have proper security, this data is at risk of theft. Therefore, efficient brokers should employ strict internet security measures, such as using Secure Sockets Layer (SSL) to ensure that transactions can’t be intercepted by unauthorized parties. Also, you should choose a forex broker whose privacy policy statement indicates that it will uphold the privacy of the data collected from its clients, and will not sell it to a third party.

Trade Execution

It is important to select a forex broker that has efficient trade execution strategies because this ensures your trades are filled on time and at the best rates. For this, there are two categories of brokers: STP (straight through processing) brokers, which pass your orders to the interbank system, and market makers, which are brokers with dealing desks. Brokers with dealing desks usually act as a trader’s direct counterparty, so when your trades gain they incur a loss, and vice versa. On the other hand, STP brokers use quotes from the interbank market and include their compensation by adding a few pips onto the spread, before forwarding the client’s trades to the liquidity provider with the best quote. You need to understand these differences to help you find a broker that meets your trading needs.

It’s also helpful to choose a broker with a no-requote policy. Requoting occurs when the broker is unwilling to fill a client’s order at the prevalent rate due to market volatility. Subsequently, they offer a new price for the order; this makes is harder for you to avoid losses and benefit from potential profits. Finally, look for a broker that offers guaranteed stop loss, as this will help you manage your risk better.

Trading Platform

Most of your forex trading activities will be conducted through you broker’s trading platform. Therefore, you should choose a forex broker with a trading platform that is stable, user-friendly, and with proper technical and fundamental analysis tools.

One of the most popular trading platforms is Metatrader, offered by brokers such as easyMarkets. Some brokers also provide their own trading platforms that are accessed within your browser, or increasingly also via mobile app. Overall, the ideal trading platform is one that highlights live prices rather than indicative quotes. It should also provide Limit and Stop trades and let you attach them to the entry order.

As we can see from the above points, if you want to be profitable in forex, you can increase your chances by choosing a good broker. Even you’re an experienced trader, you might miss out on potential profits if your broker is incompetent. Therefore, before you start trading, make sure your broker meets all your needs.

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