How to Choose the Right Forex Broker

There are many forex brokers operating in the market but not all of them have similar things to offer in terms of the support, expenses and trading tools. There is a surprising disparity between the different currency brokers although all are into the same currency trade. However, it is not an easy job to choose the right Forex Broker. Here are some tips that you should consider for choosing a broker, especially if you are new to currency trade.

Best Forex Broker Reviews:

You will definitely not want to trust your hard earned money with a stranger. Your thoughts should be on similar lines while choosing a forex broker. It is not a good idea to risk your money with a broker who has not earned a good reputation in the market. While choosing a currency broker, make sure to opt for one with a good track record. A broker, not aware or experienced in the trade can become bankrupt overnight, and your investment can go for a toss.

You should also remember that the forex market is highly unregulated and you have to be extremely careful of the scammers lurking around. It is a good idea to check whether the forex broker you have decided to work with, is registered with the Commodity Futures Trading Commission (CFTC) so that you don’t end up putting your money in a fraudulent enterprise.

Lowest Spreads

Forex brokers make money from the spread unlike your discount stock broker who charges you a fixed amount per trade. To fully understand the cost of trading in forex, you need to be well aware of the concept of the spread. The spread is nothing but the difference of the buy and the sell price and is measured in pips.

You can buy a currency at a particular price, but while selling if the price remains the same, you could lose, say, 3 pips. But the market tends to buy the currency at the bid price which means that the currency pair is supposed to gain 3 pips more so that you break even. For this reason it is ideal to choose a broker with a lower spread as you are likely to need less movements of the currency before the profiting begins. The spread generally ranges from 3 pips to 6 pips, and this is usually where the broker makes its profits.

Trading Platform

The trading platform is the software used by the currency broker and this software plays a vital role in your forex trading. These platforms can be of two types – web based or client based. The web based software is easy and convenient to use and you don’t need to download a software separately. The best thing about this platform is that you don’t even have to use your own computer and can make trades from any place.

The client based software requires you to download the software separately on your computer but the good thing is that the process works quite fast and efficiently once the downloading is done and the software is installed. The broker you choose should offer a platform that you prefer to use. The platform should have a convenient user interface and reliable connectivity.

The use of advanced live streaming price charts and graphs, in addition to up to date fundemetals news or commentary is very important.  Most traders will be relying on technical indicators such as Fibonacci sequences, RSIs and MAs in order predict future currency movements.  This makes live streaming technical charts with hundreds of customisable indicators crucial for experienced forex traders.

Being able to trade on your mobile is another massive advantage. Let’s face it, you NEED a forex trading app to be successful in the 21st century.  The ability to view live prices, execute currency swaps, and monitor your orders closely is so important nowadays. You can see an overview of the best mobile Forex apps here.

Leverage

Leverage is loved by everyone as it gives you access to a bigger amount of money when trading. You should find out what your broker offers in terms of leverage. Commonly the leverages offered are 1:25, 1:50, 1:100, 1:250 and 1:400. Usually, the bigger the leverage, the better it is for you as long as your trade moves in the right direction, but you need to learn the proper use of leverage or else you may land in trouble if the trade goes against you.

Apart from considering the tips given above, you should also carry out thorough research or collect first hand recommendations regarding the broker you are thinking of signing up with.

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