How To Choose A Forex Broker

Forex broker is one of the key elements in Forex trading, performing as a middleman that's going to execute the trades for traders on their behalf in the market. However, choosing which forex broker to trade with can be a very overwhelming task especially if you don't know what you should be looking for.

What's more, there are many scam brokers in the market, which makes it harder to choose a right forex broker. In this article, we will tell you how to choose a forex broker and what types of brokers you need to avoid.

1. Regulation

To protect yourself, you should choose a regulated broker. This step is the first and most crucial step you need to take. In most cases, any reliable broker that has licenses from regulators endeavors to provide high quality and good conditions for trading because traders can submit complaints to the regulatory authorities.

The best advice we can give you is to avoid brokers without regulation. The risk of trading with them is too high.

Fortunately, there are many licensed brokers whose services are reliable and checking the credibility of a forex broker isn't very hard. There are regulatory agencies all over the world that separate the trustworthy from the fraudulent.

2. Range of Account Types

A good forex broker would normally provide its customers with a choice from several account types to meet the needs of different traders. Make sure the account type you want to trade is available with the broker.

Especially for some forex beginner traders, choosing a broker that provides mini or micro accounts or demo accounts is essential. Mini account is designed for those new to online currency trading and those with limited investment capital, while demo accounts are good for trying out new strategies.

3. Trading Cost

A broker makes money through commissions and spreads. Amount commissions and spread declared by a forex broker is sometimes crucial for a trader making their choice of which forex company to trade with.

The spread is the gap between the buying and selling price. A good broker will have a tight spread and very low or zero commission. Which means you have less trading cost and more room to make a profit.

4. Margin and Leverage

Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. Leverage is basically a credit extended to you by your broker, allowing investors to trade significant amounts with a relatively small initial investment.

Before choosing an online Forex broker notice that what is their leverage. Choose a broker whose leverage caps correspond to the trading volume you intend to invest.

5. Order Execution

Investors have to know how fast is the broker's order execution and if the broker offer automatic execution when choosing a forex broker. The speed of order execution is even more important for those who engage in day trading and place market orders.

If order execution is slower, the prices might move a few pips until the broker fulfills the order, which reduces your chances of winning this trade.

6. Deposit and Withdrawal

Each forex broker independently decides on how to deposit and withdraw funds for their customers, as well as on the limit on the daily deposit/withdrawal. Brokers may allow account holders to fund accounts online with a credit card, via ACH payment or via PayPal, or with a wire transfer, bank check or business or personal check.

Some companies tend to handle payments faster than others. Good brokers will allow you to deposit funds and withdraw your earnings hassle-free and rarely charge customers on their money transfers.

7. Quality of Customer Service

It is necessary to evaluate the quality of customer service before choosing a forex broker. Forex is a 24 hour market, so your online Forex broker should offer 24 hour support. You could contact to their Internet help desks to see how quickly they respond to inquiries.

Another thing is that the staff has to be professional so that a person will not have any problems communicating with them. 

8. Conclusion

When choosing a forex broker, investors have to make prior investigation about the broker and figure out whether the company of choice has good reputation on the forex market. You can get a better picture of the reputation of the broker by checking their reviews online and look at how the broker responds to the reviews.