The forex market, despite being the world’s most significant capital market, is volatile. This market, which has a capitulation of $5.1 trillion per day, is competitive and unpredictable. Enormous profits, as well as huge losses, are part and parcel of this trade. To navigate this industry, you need a support system – in this case, a forex broker.
Who is a forex broker?
A forex broker is a professional who will assist you in getting into the market and managing your account. You need a competent FX broker who will not take advantage of you and make money through slippage. Before choosing a broker, you need to consider the following:
- Your goals
- The trading plan
- Flexibility and capital
Making these considerations will allow you to choose the right broker for your trading objectives. Let us look at the key strategies you should consider before settling on a broker.
1. Transaction costs
You can’t evade transaction costs in forex trading. There is often a commission or a spread to pay each time you enter a trade. You should choose a forex broker whom you can comfortably afford. Despite this, you should not compromise quality to save money. It’s less costly to enter or exit a trade when the spread is tight. A tight spread occurs in the single digits and you need to review the available options.
Additionally, some traders charge fees for wire transfer, withdrawals, credits cards, inactivity, and account closing among other things. Low brokerage might save you money, but expensive brokerages often offer excellent customer care services. Lastly, you should try to balance between low transactions costs and security.
2. The trading platform
The trading platform is your portal to a market. It allows you to react fast to a market condition. The trading platform should be user-friendly, stable, and full of features. Trading activities often happen on the brokers trading platform. You should check if a platform has all the information you need. Does it have technical and analytical tools? Is the news feed free? Are there buy and sell buttons? These are some of the questions you should ask yourself. You should also investigate whether you are allowed to use a demo account – especially if you are a beginner.
3. Security
Security is essential for any trader to be successful. There are over a dozen major forex brokers in the market today. Always look for brokers from reputable companies which are well-capitalized. Most countries have forex broker regulations. Canada, USA, France, and Europe are some of the markets where regulations are stringent. Credible brokers are registered by various licensed regulatory agencies. When you check their websites, you can find a list of companies they are licensed with and their registration numbers.
4. Deposit and withdrawal
Forex brokers facilitate your trade. Withdrawal and deposit of money are part of trading and you should ensure that your trader has good terms. Each broker has their policies when it comes to depositing or withdrawal. Some allow you to fund your account through PayPal, credit card, or wire transfer while others permit you to conduct withdrawals through check or other traditional means.
5. Execution
You should also find a broker who has good execution practices. Your broker should fill you in on the best prices for your order. The larger majority of traders lose money and this is down to the brokers they choose. You can choose brokers dealing at the desk or those who pass your orders to the interbank market. Desk brokers make a loss when your trade gains and profit when your trade experience losses.
6. Customer service
When you are a beginner in the industry, you will encounter problems once in a while. You need a broker who you can contact when a problem arises. Whether you are facing technical issues account-related issues, you need someone you can rely on. You should be able to communicate via a wide range of options with your broker. Some brokers offer informational support in terms of webinars, videos, and e-books among other items. Others have account managers to give you the support you need.
To wrap up, a broker can make or break your trading journey. You need to carry out extensive research to get a good forex broker. Picking the right one will increase your success rate. With a good broker, you can focus on other issues like developing forex strategies and doing forex analysis without worry.