5 Things To Keep In Mind When Choosing A Forex Broker

Once you get a good understanding of what forex trading is all about, you’ll probably want to start trading. The forex market is one of the more volatile trading markets, and you, therefore, want to work with the best brokers in the industry. Choosing this broker is more complex than simply seeing which charges the lowest fees, even though this is also important. This guide will help you understand what to look out for before deciding on your forex broker.

Security & Compliance

One of the most important factors when evaluating a forex broker is its level of security. The broker will be handling your funds and your personal data, and you definitely don’t want an unauthorised entity to get a hold on either of these. The most reputable brokers invest heavily in protecting their network infrastructure against all sorts of cyberattacks.

Almost every country in the world has a financial authority which regulates forex brokers and similar operations based in their jurisdiction. While the level of oversight differs greatly from country to country, such authorities are normally tasked with ensuring that the financial institutions which are registered with them operating within the law and do not cheat or scam their users.

It is, therefore, a good idea to look for forex brokers which are either licenced or at least registered with a financial authority. If verifying such information proves difficult, a less reliable method is to check client reviews across different portals. You should especially look out for any signs of people being cheated out of their money.

Visit the websites of the forex brokers you are considering to join and have a look at their enrollment and verification processes. Reputable platforms, especially those which are fully licenced, require certain identification documents. Understanding that such a process can be lengthy and bureaucratic, numerous brokers implement several time-saving options, such as offering tighter limits for accounts which have not yet been fully verified.

You should be especially wary of online forex broker platforms which allow you to start trading by simply providing an email address and your card details. Such sites could very easily be fraudulent.

Transaction Fees

Forex brokers understandably need to turn a profit in order to remain sustainable, but some brokers charge hidden or complicated fees which can add up quickly. Paying a fair fee ensures that the broker continues to operate, and provide you with a secure and innovative platform upon which to place your trades.

The main transaction fees which you will be charged are called the spread or the commission. These are the primary fees to compare, however, remember to compare them together with the other features mentioned in this guide. The cheapest broker is not necessarily the safest.

Make sure that you have easy access to an updated fee or rate card. This document should list all potential fees, which can also include administrative fees, such as an inactivity charge or a financing cost when trading on margin.

Plus500 is amongst the reputable online forex brokers which charge the lowest fees in the industry. The broker specialises in forex CFDs, which means that you won’t actually own the different currencies, but can benefit from correctly speculating on their movements. Plus500 does not charge any commissions or withdrawal fees, instead, it focuses on offering competitively priced spreads on trading pairs.

Instead of charging spreads and/or commissions, some online forex brokers charge an All In Spread. This pricing mechanism is generally considered to be more expensive, and particularly unsuitable if you plan to make a high volume of trades. You should also be aware that in some cases, limit orders set on a pair priced by an All In Spread might not function correctly.

The Convenience of Payment Methods

You might think that all online forex brokers make it as easy as possible for you to deposit your funds, but you would be sorely mistaken. For a variety of reasons, sometimes linked to their licence restrictions, online broker platforms can offer very limited, slow or expensive payment methods. You could also face similar issues for withdrawals from these brokers, so it is important that you identify brokers who offer payment methods which are convenient for yourself.

Apart from determining which payment methods you can use, you also need to consider how quickly you can see the funds in your trading account and, when you make a withdrawal, in your bank account. Some brokers charge a withdrawal fee, and the majority normally require verification documents to prevent any unauthorised withdrawals.

Trading Platform and Currency Pairs

Every reputable online forex broker should have a user-friendly and functional trading platform for you to use. Without such a platform, your instructions can be delayed or misunderstood, causing you to potentially lose money. The majority of the best online brokers offer you a demo account for you to test their platform.

This free account allows you to place trades on real markets, and to use all the educational and analysis tools which the premium account offers. You will also have access to view the latest market news and should be able to access the platform from your mobile if your shortlisted forex brokers support mobile trading.

Have a look at the different products and markets which you can trade on the same platform. Many traders like to diversify their investment portfolio, not only investing in forex, but also in shares or crypto. Ensure that the platforms you are considering offer the currency pairs which you are interested to invest in. While most of the major forex brokers might offer major pairs, such as EUR/USD or GBP/USD, exotic pairs such as USD/PLN can be much harder to find.

You should definitely make use of such accounts when you have narrowed down the search to two or three potential brokers.

When you place an order, your broker should execute the order at the exact, or very close price you’ve requested. While it is understandable that at times of very high volatility or significant breaking news this may not be possible, during normal operations the difference between your order and the actual price in the execution should never be more than a few fractional pips.

Customer Support

A broker’s support system is a factor which many newbie traders overlook until they desperately need it. The top forex brokers in the industry offer multiple channels to support new and existing clients, so spend some time to look at what your shortlisted brokers offer.

As a primary source of communication, most brokers offer a telephone line or live chat. Check the hours of operations of these methods, and make sure that that fit into your trading hours. For less serious requests, some brokers also offer an email or social media chats, although if you’ll be using such secondary methods you must expect to wait sometime for a reply.

To complement their support helpdesk, online forex trading platforms offer FAQ pages where users can easily find answers to their issues. Very often, these answers include direct links to help them solve issues there and then. The FAQ section, together with the rest of the platform, is sometimes available in different languages. Customer service personnel are also, sometimes, multi-lingual, and you’d be made aware of this as you navigate the broker’s website.

While you might not need to get support during your testing stage, have a look at the broker’s reviews to get a sense of the way that they treat customers. Keep in mind, however, that people tend to leave the majority of reviews only when they are dissatisfied with a service.

If, by this point in the guide, you still don’t have all the information you need about a particular forex broker, take this opportunity to get in touch with their customer support team. This will give you a great opportunity to determine the level of competence and graciousness of the team.