How to make Sure You Choose the Right Forex Broker

The issue of choosing the right online trading venue is not made easy to anyone who tries to get an overview of all the offers in the market. Current and future Forex traders encounter new brands and trading platforms almost every day. For the experienced brokers, the issues with many offers are usually tied to the trading conditions and commissions. Newbies are more concerned about the legitimacy and safety of the online company they are depositing their money with. Incoming news about scams in the industry do not help to reduce the anxiety when clicking the deposit button with a Forex broker.

Most reliable way to approach the subject of selecting the best broker for yourself is to determine what do you need to have in order to be able to properly trade and focus on the market. There are several main points that make up the total experience when trading Forex or other assets via CFDs online and we will try to briefly touch the most important ones in this article.

Forex Broker Safety and Reputation

This first one is a no-brainier simply because no matter how much you deposit on your trading account you want to know that the money is safe. Also, you want to be able to trust the broker they will act fairly when it comes to the management of the trading platform and market conditions. This means that a broker which is regulated is probably the best choice here. Regulated brokers are under government scrutiny, they have to protect their clients’ funds and their platform is also periodically checked in order to ensure they are not manipulating certain parameters like spreads or prices in order to increase your chances of loss.

Forex Trading Platform Offered By the Broker

While most Forex brokers offer CFD trading on MT4 or MT5 platform, it does not have to mean you have to like it or use it. Many people prefer Sirix or c Trader or other web platforms which can provide excellent experience in a less autocratic environment than the Meta Trader. Beginners prefer something that is simpler or visually appealing, so make sure to sign up with brokers that offer several types of platform. Use a demo account to test them all and decide for yourself what is the best product for you. Getting a demo is a fairly quick process, so don’t be lazy.

Spreads and Commissions when Trading CFDs/Forex

When you have a broker and a platform, you have to see if the trading conditions offered are something you can agree with. Maybe there are brokers offering more favorable conditions out there. Make sure to compare spreads of the assets you trade the most. If you are a beginner, try to look at the asset list and try to compare spreads offered for multiple assets to get an idea before you deposit. Spreads are cost of trading and, while they might seem minuscule, lot after lot traded, these costs pile up!

You can avoid large spreads by using a broker that offers ECN accounts, where you get super low spreads and direct access to liquidity pools. There’s a catch however – these brokers will charge commissions, which, per lot traded can reach several USD, for each trading order (open and close of the trade).

Commissions make sense for traders who trade large volumes and need their spreads tight and commissions fixed without nasty surprises. Also, ECN accounts usually require higher deposits.

Other features

If you are a beginner, you need to learn about technical and fundamental analysis. Many brokers offer free webinars and a complete set of articles on how to start. This may be something you will benefit from and should seek a broker that offers education opportunities.

If you want to trade Forex with cryptocurrency pairs, you might need to find a broker that offers best trading conditions since these assets tend to bring high spreads and commissions compared to other currency pairs.

Auto trading or Copy Trading features are also a plus. You might want to become more "social" while trading by following other traders and copying their trades. In order to do this, you need a broker which has this implemented in their platform.

If you prefer higher risk, brokers that are offering higher leverage might be the right way to appetizer on your risk appetite, however, don’t forget, losses are enhanced as well as profits when the leverage rises.

Overall, try to find a broker that seems trustworthy by noticing if its regulated and reading online reviews from relevant sources. Also, make sure to deeply think what are your needs and prepare for certain trade offs when selecting the Forex broker that is right for you.

John Pollock is a proprietary trader and CMT® charter holder specializing in short to medium-term technical strategies. He decided binary options were too risky for him and that he'd be better off focusing on his share portfolio.