Things To Consider While Selecting An Ideal Forex Broker

By Rajesh B Sanghvi

Forex is the world's biggest financial market, where an average of above $4 trillion is being traded everyday. For conducting trades in this lucrative foreign exchange market, you have to select a reliable broker platform. You can check out the Forex broker review sites and choose the best ones that best suit your trading style and capacity.

Selecting a Forex Broker - Things to Consider

Regulatory Compliance:

An authorized broker in the US must be registered with the CFTC, which is an independent Government agency. Additionally, they should also be a member of NFA, a self-regulatory organization. Never get impressed with professional and flashy looking websites. Try and find out, if they are worth doing business with.

     Read also : How Beginners Can Start Making Money Through Forex

On the webpage, you will find the broker's NFA membership number, and if they have the CFTC registration, it will also be mentioned. This research is necessary, owing to possible concerns about the safety of deposits, and the broker's integrity. Remember to open accounts only with the brokerage firms that are duly regulated.

Account details

Terms of opening trading accounts differ from one firm to another.

> Leverage and margin - Variety of leverage options are provided to Forex traders. They can be somewhere in the lines of 200:1 or 50:1. Leverage is a credit provided to the margin account holder. If leverage works positively, then it brings in high profits, but losses get equally magnified if the exchange market goes in the opposite direction.

> Commissions & spreads - Broker earns through commissions & spreads. Commissions can be charged on specified spread percentage. Some brokers do not charge commission, but make cash with wider spreads.

> Initial deposit - Traders can open an account with small initial deposits. With leverage, the buying power increases, more than minimum deposit. It is appealing to the new investors.

> Ease of deposit & withdrawal - Deposit & withdrawal policies differ. Account holders can fund accounts online using credit card, PayPal, wire transfer, etc. Withdrawals can be made through wire transfer or check. Fees may be charged for withdrawal services.

Offered currency pairs

Major currency pairs are USD/JPY, EUR/USD, USD/CHF and GBP/USD. You will be offered a lot of Forex currency pairs, but make sure that the list includes the pair that you are interested in.

Customer service

Foreign exchange market runs for 24 hours, so a brokerage firm must provide customer support round the clock. Auto attendant is frustrating, whereas talking to live person is always a comfort.

A call can give you the idea about their customer service quality. You will know if the representative is able to easily answer your questions regarding leverage, spreads, company details, and regulations.

Trading platform

The software provided by the trading platform must be visually pleasing, easy to use, have technical & fundamental analysis tools. A well-designed trade platform has clear 'sell' and 'buy' buttons.

Other features to consider would include availability of automated trading options, back-testing, trading alerts, strategy builders, and customization options. You can start with the free demo accounts to get familiar with the trading platform.

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