One of the greatest things about the Forex market is just how competitive it is. There are countless brokers, all with different terms, offers, and impressive stats to digest. For the beginner investor looking to choose a Forex broker to partner with, all of this information and competition can start to be a bit overwhelming. Who offers great quality and who is simply good at marketing? Well, there are a few ways to spot a good Forex broker, so let’s help you with the process.
Credibility, Legitimacy, Track Record
Anyone can claim to be a Forex broker, which makes the industry ripe for scams. So, before you hand over your hard-earned cash investment, check their credentials with one of the world’s various regulatory agencies (the UK is served by the FCA – Financial Conduct Authority, and PRA – Prudential Regulation Authority). If the broker you’ve found is not a member of any regulatory body, this is a big red flag.
Thanks to Google reviews, Trustpilot, and other sites of the same ilk, you may be able to find customer feedback about Forex brokers before you deal with them. If you see alarm bells like ‘I’ve been waiting 2 weeks for an email response’, or ‘they never answer the phone’, that can be enough of a reason not to choose this Forex broker. Some Forex brokers are amazing at selling you their service and then their willingness to help or do after-sales suddenly dries up once they have your funds. Remember, Forex is open 24 hours, five days a week, so your broker should be too!
If you have found a Forex broker than doesn’t offer the following, you should resume your search, as these are essentials:
- Leverage and margin trading
- Lots of currency trading pairs available
- Lack of transparency around commissions and spreads
- Standard, mini, and micro accounts available
- Easy account deposits – bank transfer, PayPal, credit card etc
User-Friendly Trading Platform
When you’re Forex trading on a regular basis, few things will become more important to you than the platform itself. You might be able to overlook some weaknesses as long as the trading view is comfortable, logical, user-friendly, and stable. Knowing this, you have to bare in mind that Forex brokers use different trading platforms to suit their needs; MetaTrader, TradeStation, NinjaTrader, ProRealTime and cTrader are among the most popular.
Some features you should be looking for are charting tools, information and visual display options, a news feed, and more.
Suitable for Beginners, Professionals, Day Trading, and Scalping
To generalise Forex traders into four categories, it would be these four:
- Beginners – Minimal experience, low risk, small amount of funds, often looking for a broker that will do the trading for them or make it as simple as possible. The best brokers for beginners will have plenty of training and education resources, a demo account to practice on, and an uncomplicated trading platform
- Professionals – Low spreads, high leverages, and complex trading tools are essential for the pros, who often get paid a salary to trade currencies and so don’t have a personal investment in the outcome of trades
- Day traders – Day traders are typically independent traders who were once beginners and are now experienced at reading the market. These traders need lots of helpful tools and instruments to help them spot opportunities. Since these traders will make many trades in a day, low spreads are vital
- Scalpers – These are the day traders who make lots and lots of trades, aiming to make small profits on each one. Low spreads are essential, but more than that, they need the assurance that the Forex broker supports scalping, as not all of them do
Considering all of the points made above, you’re now armed with the right knowledge to go and choose a Forex broker that suits your needs, your style, and your strategy. Good luck!