The Forex market, the largest financial market in the world, has a turnover of nearly $4 trillion per day. Despite its large size, this market doesn’t have a central exchange for traders to perform their transactions. The Forex traders need to perform their trading via an intermediary that is the Forex broker. So, a Forex broker plays a vital role in the Forex trading process. There are thousands of Forex brokers available on the internet. So, how can you be sure that the Forex broker you choose is the best fit for you and your trading needs? Here is a guide stating the main factors you should look at while choosing a Forex broker.
What Is a Forex Broker?
A forex broker, also called currency trading brokers or retail forex brokers, is a financial service company that offers traders complete access to a big platform where they can sell and buy foreign currencies. Forex brokers work as an intermediate between the interbank system and you. Interbank refers to a network of banks that can trade with one another. A forex broker will generally offer a price from banks that offer access to liquidity and where they have a line of credit.
Why Do You Need a Forex Broker?
Finding a reliable Forex broker is essential for Forex trading as a broker will connect traders with the market. A Forex broker is a company or an individual that performs trade orders to book profits in the forex market. That is the main reason why you should find a trustworthy Forex broker. An Fx broker can also help you conduct Forex deals and help you at various points of trades.
Most reputed Forex brokers also let traders trade on leverage, an excellent method to increase profits with minimum deposit amounts. A good Forex broker will also assist you in understanding the tricks of Fx trading. They will also offer you the information you need to trade better. What’s more, with a good forex broker, you also get access to reliable and legitimate trading platforms. They help novice traders understand foreign exchange and learn the ropes. Most importantly, they can help traders avoid making the most common mistakes.
Things to Keep in Mind While Choosing a Forex Broker
The Fx broker that you choose is the most vital trade that you will make. You will be giving your trading money to that company or individual with an expectation to trade using it and withdraw that money when you want to take profits. Follow the tips below to find the right Forex broker that can meet your needs:
Regulations: The first and foremost thing that you must look at while choosing a Forex broker is whether the Fx broker is regulated or not. They need to be regulated by a reliable and known regulatory agency. By working with regulated brokers, you get the assurance that they will meet the working standards required by those regulatory bodies.
Offered Currency Pairs: While many currencies are readily available to trade, only some of them get the most attention. Hence, trade with the highest liquidity. A Forex broker may offer many currency pairs, but it is essential to find whether they offer currency pairs in which traders are interested or not.
Trading Platforms: A trading platform is a trader’s portal to the Forex market. The traders should ensure that the software or platform offered by the broker is visually pleasing and simple to use. It should also allow simple entry and exit and have many fundamental and technical analysis tools. A well-made trading platform will offer clear “Sell” and “buy” buttons. There are many factors to consider when selecting the best platform. Ensure to take all that you can into your consideration before you involve yourself.
Customer Services: Fx trading happens 24 hours every day. So, the broker you choose should offer customer support for 24 hours. Another important thing that you should consider is the easiness with which you can talk with their live representative, instead of a frustrating and time-consuming auto attendant. When selecting a Forex broker, a prompt call can provide an idea of their customer services, their representative’s abilities to answer questions regarding regulations, leverage, company details, and spreads.
Deposits and Withdrawals: A good forex broker will let you deposit capital and withdraw earnings quickly and in a hassle-free way. They don’t have any reason to make it difficult to withdraw funds.
Transaction Costs: Regardless of what type of Fx trader you’re, you will have to pay transaction costs. Whenever you enter in a trade, you’ll have to pay a commission or a spread. So, look for the cheapest and most affordable rates.
Security: Security features differ from one broker to the other. A few of them have integrated security aspects like 2-step authentication that keeps your trading account safe from hackers.
How to Find if a Forex Broker Is Legit or Not?
Below are the main steps using which you can easily find whether a Forex broker is a legit one or not:
Do Some Research: Do a simple online search with the Forex broker or the firm name. It may bring up the latest media reports or releases of disciplinary actions or alleged wrongdoings, background information, client conversation on online forums, and more. Next, you can search the regulatory agencies. Forex traders need to register themselves with state and federal regulators.
Have A Conversation: You should be comfortable with the Forex broker who will offer you trading services, products, and advice. So, ask a lot of questions when it comes to what the Forex broker offers. If you don’t get straight replies or the broker seems unwilling or rushed to deliver you clear and complete information, you should look elsewhere.
Be Cautious of Cold Contacts: Beware of a Forex broker that contacts you unwelcomed from a firm you have never done business earlier. The contact can come in the form of phone calls, letters, or emails. Do not get stuck by an invitation to an investment seminar offering free lunch or gifts as it aims at making you invest blindly.
Which Are Good Forex Brokers for Beginners?
The best Fx brokers for beginners provide three main perks:
- They are a trusted and regulated brand that gives access to user-friendly online platforms.
- They offer a solid range of educational resources.
- They give access to high-quality market research.
So, here is a list of the top forex brokers for beginners:
Plus500: Number one forex broker for beginners with all features.
eToro- Best for copy trading
IG – Highly trusted platform offering excellent education
XTB- Great education with best customer services
AvaTrade – High-quality educational resources
It would be best if you took time when searching for a good forex broker as a wrong decision can be pretty expensive. The best brokers will offer you low trading costs, access to the global interbank systems, and robust resources. They will handle your wealth with care, although you open only a small account to make small fortunes using your trading skills. Now, when you have learned how to select a reliable forex broker, you must go through the best UK forex brokers list so that you can choose one among them to start your incredible trading journey and achieve success.