6 Vital Things To Consider When Selecting A Broker

One of the most competitive markets in the financial sector is the retail forex market. It is so competitive that just thinking about going through the entire list of available brokers in the market can give you a migraine.  

Selecting which forex broker is reliable to trade with can be an incredibly daunting task, especially if you are not aware of what to look for or how to go about it.

So, we are going to show you the qualities you should look for when selecting a forex broker.

Here we go!

1. Security

The first and most important feature a reliable broker must have is a high and dependable level of security. Think about it; you are not just going to hand over hundreds and thousands of dollars to someone you barely know just because he claims to be legit, would you? No, you wouldn’t!

The good news is that it is not difficult to verify the credibility of a forex broker. There are many regulatory agencies across the world that specializes in separating the trustworthy broker from the fraudulent broker.

Below is a summary list of countries with their respective regulatory agencies.

  • Australia: Australian Securities and Investment Commission (ASIC)
  • Canada: Investment Information regulatory Organization of Canada (IIROC)
  • France: Authorite de Marches Financiers (AMF)
  • Germany: Bundesanstalt fur Finanzdienstleistungsauficht (BaFIN)
  • United Kingdom: Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA)
  • United States: Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA)
  • Switzerland:  Swiss Federal Banking Commission (SFBC)

Before you think of allowing a broker to take charge of your money, make sure the broker in question is a member of one of these regulatory agencies.

2. Cost of Transaction

No matter the type of currency trader you may be, you will always find yourself at the receiving ends of transaction costs, whether you like it or not.

Every time you will engage in a trade, you will have to make payment for either a commission or the spread. Therefore, it is normal that you should look for the cheapest and affordable rates.

There are times when you might need to sacrifice the best, low transaction rates for a more efficient and reliable broker.

Be sure to verify if you need tight spreads for the kind of trading you are into. Then, review the options available to you. Everything has to do with finding the appropriate balance between low transaction cost and security.

3. Deposit and Withdrawal

A reliable forex broker will enable you to deposit and withdraw your funds without any hassle.

Typically, brokers have no reasons to make it difficult for you to withdraw your profits since the only reason they are holding on to your funds is to encourage trading.

The fact is that your broker is only holding your funds to make things easier, so there should be no reason you should be finding it challenging to get the profits you have earned. As a matter of urgency, your broker should see to it that the profit withdrawal process is fast and hitch-free.

4. Trading Platform

Majority of the trading activities that happen in online forex trading occurs within the trading platform of the broker. Therefore, it is essential that your broker’s trading platform should be stable and user-friendly.

When you are selecting a broker, the trading platform should be one of the significant factors to consider.

Does the platform offer free news feed? What about the charting tools and such other technical details; are they easy to use? Does the trading platform present you with every single detail you will need to have a successful trade?

5. Execution

It is obligatory for your broker to fill all your orders at the best possible price.

Typical market conditions such as regular essential news releases, normal liquidity or surprise events, means that your broker has no reason to not fill you at the exact or closer to the market price that you will typically see any time you click the “buy” or “sell” button.

For instance, let us assume you have a stable internet connection, if you decide to click ‘buy’ EUR/USD for 1.4000, your broker should fill you at that price, or within the micro-pips of that same price. The speed at which your orders are filled is very critical, especially if you’re a scalper.

A difference in pips price, no matter how few, can make it extremely difficult for you to win that trade.

6. Good Customers Services

Brokers are far from perfect, and so you must select a broker whom you can contact easily when issues arise.

The competitive nature of brokers regarding technical support or account issues is equally as vital as their performance levels when executing client orders.

It is not impossible that brokers may appear helpful and kind during the time of opening the account but turns out to be horrible and terrible in rendering ‘after sales’ supports.

Our will next lesson we be why you should beware of forex bucket shops.

  • BrokerEUR/USD
    LCG 0.3pips (variable) margin: 3.33%
    OANDA 1.3pips (variable) margin: 3.33%
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