Tips for choosing Forex brokers
You only have to look online to see that there are hundreds of Forex brokers out there at the moment, each offering access to the markets. If you are an experienced trader you may find the task of choosing one quite easy. However, if you have never used a Forex broker before, you may find the task slightly harder. The reason why is because most new traders do not know what to look for. With this in mind, the purpose of this article is to make traders aware of a few major factors they should consider when they begin their search.
Are they regulated?
A regulator will devise a set of rules, practices and codes by which all Forex brokers should adhere to. Without the interference of a regulatory body companies can do what they want. As this is quite a sensitive market, regulation works in the trader’s favour as any ill practice from the broker’s side can be challenged and eventually beaten. Each country has their own regulatory body. For example, the US has the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission). The UK has the FCA (Financial Conduct Authority). Ensure that you find the relative regulatory body for the country your broker’s main head office is in. If they are regulated, you should be safe enough.
Believe it or not, there are many companies around with a flashy website but no head office address. Ensure that your broker has an address and not just an online chat facility. Most bad companies do not provide an address to ensure they cannot be reached if a crisis takes place.
Commission and spreads
This is how brokers make money from you. However, there are many brokers that claim they do not charge commission. This is not true. Instead of charging commission they make the spread a lot wider to compensate. This means that it will cost the same to enter a trade whether a commission is being charged or not.
It is pretty hard to come across a ‘un-usable’ platform these days as majority of companies use MT4 or MT5 software. Some do have their own trading platforms but even so, they are very good. It is only when you come across an out of date and difficult platform that you should consider finding a new broker.
Ensure that there are people there to speak to who are able to resolve issues. You will be surprised how many companies have a customer service department that is simply useless. If any customer services representative avoids the issue you have raised, you may be fighting a losing battle. Using a broker from your own country with an accessible office may be the best option.
Above are just a few of the main factors you should consider when choosing a Forex broker. There are many others which will become apparent during your search but the above factors should give you a good start.