How To Pick The Best Forex Broker
Type in “forex broker” in Google and you’ll be met with an astonishing 21 million results. Best cancel your schedule for the rest of the day then – or better still, read this article on picking a good, reliable forex broker that meets your needs, and keeps your capital safe.
- Safety & Reliability – Make Sure Your Trading Capital Is Well Protected
It’s your hard earned money that you’re trading with. The general default attitude most of us have when we open up accounts relating to money is that “it must be safe”. Well, you only have to see the near collapse that some “blue chip” banks have been reduced to in recent years to know, that’s a pretty dangerous assumption to make.
You should check to see if your broker is registered with the relative financial authority in the country it operates in. For the UK, this is the Financial Services Authority (FSA), or for the USA it would be the National Futures Association (NFA) or Commodity Trading Futures Commission (CFTC).
If the broker you’re researching does not belong to an authority which regulates it, that’s a giant flapping red flag telling you to stay away. Because should anything happen, you could find that your money simply disappears. Gone. And unlike the big banks, there will be no government money to bail you out!
- Lower Spreads Over All Currency Pairs – Keep More Of Your Profits
Different brokers will offer different spreads on different currency pairs. If you intend to trade a wide spectrum of currency pairs, then research the spreads for each of these. Typically, most brokers offer competitive spreads for the EUR/USD currency pair, which is the most widely traded currency pair. But, some offer very large spreads for some of the less popular options. The last thing you want is to discover that there’s a cracking trading opportunity on JPY/NZD but you cannot get involved because the broker you opted for is asking for a 10 pip spread.
- Choose A Broker That Allows Micro Lots
A lot refers to the size of each trade. For many home based forex traders, an ordinary lot would mean investing too much of their trading capital in one trade. Luckily, some brokers who are trying to capture the business of smaller home based forex traders now offer “micro lots” allowing you to risk as little as a penny per pip. Not all brokers offer micro lots, so if you’re a new trader and you have a lower amount of capital to start with, then pick a broker that offers this feature.
- Tips, Tools, News & Research At Your Fingertips
It’s incredible the way forex trading has evolved over the years. Not so long ago, it was impossible for the smaller individual to profit from the markets at all. And when forex was first offered to the home based trader, often we would have to pay for research, charting and information. No longer, because the good brokers offer just about every tool, news feed and research that you require to trade with success – right at your disposal, as soon as you login. All part of the service.
- Forex Companies WANT Your Business – Make Sure Their Support Is Good
Keep in mind that forex brokers all want your business. So, much like the hottest girl at the club, you can make them dance to your tune, and sometimes even get them to throw in some extras (eg bonus trading cash if you are investing a huge amount). Before you go with any broker, email them a few questions and see what the response is like. It’s very important to have a broker who answers emails promptly and with courtesy. Not all of them offer exemplary customer service.
Your broker is an important partner when you trade – keeping the above tips in mind when you research brokers will ensure that you pick the best possible one. And you won’t have to wade through 21 million sites to decide.