You might know the trading sessions and the metrics in your trading platform, but if you don’t know how to choose your broker in such a competitive market, you can feel lost and your trading strategy might not work.
It is like a woman on a budget choosing a pair of shoes in a big retail store without knowing which size or color she wants.
In order to choose which broker is the right fit for you, you need to look for some major characteristics.
Look at the following list:
You are gonna trust your broker with your money, so you must know if they are reliable in the first place.
You need to check the credibility of the forex broker of your choosing.
There are regulatory agencies all over the world that separate the trustworthy from the crooked ones.
Below is a list of countries with their corresponding regulatory bodies:
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
- Australia: Australian Securities and Investment Commission (ASIC)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- France: Autorité des Marchés Financiers (AMF)
- Canada: Investment Information Regulatory Organization of Canada (IIROC)
Every time you choose a brokerage house, make sure that they are a member of one of these regulatory bodies.
2. Transaction Costs
You can’t avoid the transaction costs!
Somehow you can avoid paying your taxes (WE DON’T RECOMMEND THAT) but you cannot avoid paying either the spread or a commission when you enter a trade.
You need to look for the most affordable and cheapest rates.
Sometimes low transactions can mislead you to choose not a reliable broker.
Because of that you have to find a balance between what you can afford paying and choosing a trustworthy broker.
3. Deposit and Withdrawal
The process of depositing and withdrawing your money should be a piece of cake.
Brokers won’t benefit if you have a hard time withdrawing your profits.
The withdrawal process needs to be speedy and smooth.
4. Trading Platform
Most of your trading activity happens through the brokers’ trading platform.
That’s why it needs to be as comfortable as it can be.
You want your “kitchen” to be organized and have all the ingredients you need!
It has to give you all the information you need and it has to be easily accessible.
Their technical features and tools should be ready to use and properly organised at your disposal.
Before you choose a broker, always check what its trading platform has to offer.
It’s a MUST that your broker fills you at the best possible price for your orders.
When there are no news breakouts or any other event that can shake the particular currency, you should get filled at a very close price to the market price you want to sell or buy.
If you decide to buy GBP/USD for 1.38415, you should get filled at that price or within micro-pips of it. If you’re a scalper one of the most important things would be the speed at which your orders get filled.
Scalpers are those traders who enter and exit the financial markets quickly, usually within seconds. They use higher levels of leverage to place larger sized trades. Scalpers’ target is to achieve greater profits from relatively small price changes.
A few pips difference in price can make that much harder on you to win that trade.
6. Customer Service
Good customer service is one of the major necessities in every industry.
If there is a problem, you have to be able to easily contact them.
Technical support brings another aspect of competitiveness between the brokers.
Don’t underestimate it, it is as important as their performance on executing trades.
Especially if you are in the middle of a trade, you must have the possibility to count on them for every occurring issue with your account.
Forex brokers may be kind and helpful during the account opening process but they are famous for their terrible “after-sales” support.