How to choose a Forex broker
Choosing a Forex broker
Before starting to trade on the Forex market, the future trader has to think thoroughly the question of how to choose the broker, providing services of deals execution. The question is very serious and it is necessary to treat it responsibly. The Forex broker that you have chosen will provide (or not provide) direct access to the international currency market Forex, as well as other important brokerage services in the future. You will have to work in the market according to its spreads, according to the set trading conditions.
Which Forex Broker to Choose
If you are planning to trade positively, i.e. to open deals and keep them for weeks and months, then there is no problem - you just choose any brokerage company known in the market. The main thing is that the broker should be reliable, with experience, reputation, large turnover and the number of active clients. Check forex brokers comparison to find out which brokers are chosen by other people.
But it should be taken into account that most traders at first try to trade as often as possible - one or more transactions in one day. Here already an important factor when choosing a broker will be the commission it takes for it. If a broker charges a big commission, it is not profitable to work with him. Many brokerage companies having the fixed spreads add their own percentages to the quotations, which are sometimes very overstated. In these cases, traders who trade on Forex also pay inflated commissions, which is not profitable for the trade, reduces the expectation and can even lead a profitable system into deficit.
In that case, it is very important to choose the right broker who will not bankrupt you, but on the contrary, who will help you to earn more. In addition, the broker is a connecting link and a guide on the currency market. He works according to the rules and laws of the market.
When to choose an ECN broker
ECN brokerage company has an important feature - he gives a trader the real interbank quotes without various own mark-ups. But in this case the broker charges a commission from the volume of transactions - usually $15-25 from 1 million of trade turnover. And the more turnover, the less commission. Trading through an ECN broker means receiving more profit than any dealing center can offer, since the broker is not interested in your losses. But with a professional ECN broker there are real market conditions with such surprises as spread widening, slippage, etc:
- When breaking news comes out in the market;
- When the trading week opens Monday night;
- When the market closes on Friday.
For professional traders with big trading turnover ECN brokerage company is considered as the best choice on the currency market. It allows fast trading with minimal costs and low spreads. But if you're a beginner, then it's not so important for you to choose an ECN broker right away. You can start in any dealing center, the trading conditions there might be even better until you start earning a lot.
Criteria for choosing a Forex broker
How to choose a Forex broker is a very important question. When choosing one, there are many factors to consider:
1. What is the age of the company?
The longer the company has been on the currency market, the more stable it is. The age of the brokerage company gives reasons to believe the chosen broker or not. This means that it has its own clients, it has managed to establish itself over many years.
2. Location and number of branches
This is one of the most important factors. A brokerage company may have many branches around the world or one office in Cyprus. Of course, there is a difference and it makes a big difference.
3. The turnover of funds and the number of clients
The credibility of the company depends on this. The more active clients the company has, the more traders trust it and the higher income the currency market generates, the more stable it is on the market. If the company has very few clients, you will have to think twice.
4. Who regulates the brokerage company?
Often the company is regulated by such authorities as the NFA (USA), the FSA (Great Britain), the FCMC (Russia) and others. There must also be a guarantee that in any case you can appeal to external independent authorities (court, arbitration).
5. Reputation of the brokerage company
A very important indicator, though difficult to evaluate. The reputation shows which Forex broker is the best on the market. Before choosing a broker, you should read the reviews about this company. If a broker has a lot of reviews, both bad and good, it is a good indicator. If a broker has no reviews at all or only positive reviews, it is better not to choose it. The absence of reviews shows that the broker is not interesting for traders, and there are no brokers with only positive reviews, most likely these reviews are bought.
6. Client agreement
It's important to carefully read the agreement you accept. It should clearly describe the relationship between the broker and the trader, the conditions of execution and acceptance of results of transactions. Also it is important to read the regulations, in accordance with which operations on the currency market are carried out. Sometimes a broker specifically states in the agreement the conditions under which he can cancel the results of any transaction, and you simply will not receive the profits earned.
7. Broker's trading conditions.
These points include:
The selection of currency pairs and other instruments available for trading;
The amount and type of broker commission - floating or fixed spread, or commission per turnover. If a broker's spread is significantly lower than that of its competitors - that is a troubling indicator;
It is necessary to know the broker's sources of currency quotations - whether he forms them himself or takes from the interbank market, who supplies liquidity;
Probability of "slippage" at closing of deals and ways of solving it should be taken into consideration;
There must be a guarantee that market orders will be executed;
If you open a PAMM account, must take into account the adjustment of open positions when investors deposit and withdraw funds;
Also the following conditions should be provided: convenient and accessible interface of the terminal, technical support at any time, connection to the broker's server, secure data exchange, the possibility of working on a special demo account.
How to choose the right Forex broker
So, in order to make a final decision which broker to choose in the Forex currency market, you need to think thoroughly. It is better to spend a couple of days for thinking over and studying the companies than incurring losses.
Once you have chosen one or more brokers, start by depositing a small amount in order to verify the broker's work. Pay attention to such components as: spread, minimal lot, leverage. If trading is comfortable for you and there are no problems, you can replenish the account. This means that the broker you have chosen is working well and correctly. If you feel problems in the broker's work, if you notice a delay in opening an order, you should refuse this broker. Today there are many brokers to choose from on https://tradersunion.com/.
It is necessary to choose a broker with which you feel comfortable to work. Which one suits you in everything. The reviews about the broker might not be very good, but he has been working at the market for many years, and he has a small commissions and a good reputation among the experienced traders. You can work with the broker for a month and analyze the work with him, if you work well with him, you can keep him. You should also remember that the broker can work differently. Today you can earn a lot of money thanks to it, but tomorrow you will lose. And such situations happen on the market. The main thing is that you should be more often in the black, i.e. make a profit, feel that your Forex broker is the best, and then everything will be fine!