Factors to consider when choosing Forex brokers
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There are 1000’s of Forex brokers out there and it is because of this sheer volume that new traders struggle to know where to start their search. As a result we have made a video tutorial which describes the main factors you should consider and below are those exact points.
Poor regulation in other countries
Traders usually choose Forex brokers with a head office within their own country. However, this way, they may not get the best deal. On the flip side, if a Forex broker is chosen from another country research has to be undertaken to find out whom the regulatory body is and if the broker has acquired the required licences to operate legally within that country. The only reason for this is that Forex regulation still has plenty of question marks around it, even in the UK and the US. There is no central exchange so it is hard to keep track of, but this is improving every year. Other countries have even weaker regulation policies so it is always worth finding out more before signing up.
Marketing campaigns designed to fool customers into signing-up
Do not fall for big and shiny advertising/marketing campaigns that promise to make you a millionaire in a few days. There are literally thousands of advertisements out there that promise traders they can get 100 pips per day by using their platform. They cannot do this. It is a play on words. All Forex brokers can do is provide you with an OPPORTUNITY to make 100 pips per day by using the platform. The only way such amounts can be made is if the Forex trading strategies used are good enough. If they are not, you cannot sue your broker because for loss of capital; it is your responsibility.
These marketing campaigns are designed to get people to sign-up to a live account. The more people sign-up the more funding the broker receives. The more they receive, the more financially stable they are. When they go to their bank manager and ask for a loan to expand their business, chances are they will get it because of the financial stability the bank manager sees. So, do not help the Forex broker, help yourself.
Low spreads vs. high spreads
If you are looking for the cheapest way to trade then you should look for Forex brokers with low spreads. However, be aware that low spreads usually means that a commission charge is added to your transactions. So, every time you click ‘buy’ or’ sell’ a fee will be applied. If you are looking for a more high-end broker, spreads tend to be slightly wider and there is either a small amount or no commission. However, do your research because sometimes the cost of having a low spread broker with commission and higher spreads broker without commission can be the same.
Easy to use platforms
All Forex brokers have to supply a platform that is easy to use. Some provide their own versions while some provide MT4 or MT5, especially within the retail trading world. Whatever the platform, traders must ensure that the process of using it is seamless. There will be a lot of important trading decisions being made on a daily basis so the last we need is a platform that takes too long to process simple actions.
Forex brokers have to allow traders the ability to enter or exit the markets with no delay. Unfortunately, this is where a lot of brokers fail. There are a few out there that look for the best possible price after traders click ‘buy’ or ‘sell’; and this can take from 2-10 seconds. If smaller time frames are being traded here, this can eat into our profit. You should not suffer because your broker cannot find the price they are quoting.
It is not hard to find an offer of 1:500 in terms of leverage. Our advice is not to use a platform that offers more than 1:200. Any higher leaves us too exposed and it is far too risky. If wrong decisions are made, it can hit our trading account quite heavily.
Demo trading account for life, not 2 weeks
Even professionals use demo accounts on a daily/weekly/monthly basis. The reason why is because the demo environment allows them to test new strategies, develop and adapt current ones or further develop their confidence if they had a bad run in the live markets. Demo accounts are therefore essential for any trader. If all you are offered is an account for a few weeks then get in contact with them and demand a life-long demo account otherwise find a new broker. Their aim is to get you to fund and trade the live account as soon as possible so they put a limit on the demo account. Ensure that you do not trade or rush under their terms.
Payment issues and delays
They make it very easy to upload your funds into the live account but when it comes to taking the money out, it can be harder. If this is the case then alarm bells should be ringing in your head. The process of taking the money out should be as easy as funding the account. On top, there may also be charges applied to uploading and withdrawing funds so ensure that they are fair.
Customer service is paramount to any business. They have a responsibility to answer any question you may have and they should know everything about their service. If they do not know the answer, that is fine, as long as they get back to you. If they do not or they avoid the issues they do not have your best interests at heart.
Our Forex brokers table
We have a list of our trusted Forex brokers which is updated frequently. There are a number of brokers that contact us in order to be included in this list but we decline a lot. We only include Forex brokers that result in a good analysis. Have a look and pick one to start trading.