To enter into the world of Forex trading, you need a well-regulated forex broker that offers all popular currency pairs. Today, thousands of brokers focus on industry penetration because most of the population is shifting online. An online Forex broker allows you to trade in various asset classes other than Foreign exchange. There are many instruments such as stocks, indices, cryptocurrencies and commodities.
This article will tell you about the 9 essential factors to keep in mind while choosing a Forex broker. Now we discuss all essential factors like regulations, trading platforms, minimum deposit, trading account features and customer support you need to know to select the right brokerage and protect your hard-earned money.
Here are the 9 essential factors to consider while choosing a good forex broker.
The first step to choose a broker is to look at its regulatory bodies. You need to confirm the regulatory authority is legit or not. The other one is that you should ensure that the forex broker is regulated under a specific license number. If the brokerage firm is operating in a foreign country, the broker should also abide by the law of the financial authorities of that country.
A well-regulated cannot flee with your money, neither it can manipulate the market. In case of any discrepancy, the regulatory authority is responsible for returning your money. Make sure that the broker also uses encryption for the cyber security of clients’ accounts. A well-reputed broker always put information about its regulation on its website.
So remember this important step to check whether the broker is well regulated or not on its website. A broker should mention their license number, registered address, support mail ID and all contact support details on their website.
A well-regulated brokerage firm does not have a flashy website. To check whether the broker is regulated or not, you can go to the firm’s website and click on regulations or legal terms. There, you can watch the license number and the details of the regulatory authority.
2. Trading platforms
A good broker offers a smooth trading experience to its clients through efficient trading platforms. Most reputed forex brokers provide three trading platforms: We trader, MetaTrader 4 and mobile trading platform (Broker’s Mobile App). Today, more advanced trading software MetaTrader 5 is also getting popular.
Ensure that the broker offers at least MetaTrader 4 platform. MT4 is an award-winning trading software and is the best fit for all sorts of traders who want to make great returns on their investment. MetaTrader 4 is a complete package that can fulfil your needs, from customizing tools to go long or short on the market.
The software is well encrypted to avoid cyber scams, and it also provides you with tight security so that no one can watch your trading moves.
A forex broker with an MT4 platform can be highly beneficial for you. For example, you can access trade history, one-click trading options, multiple trading modes, numerous time frames, advanced analytical tools, instant market updates, etc.
Other than the MT4 platform, you should also check that the broker is providing a well-efficient mobile app. You can trade through the mobile trading software from anywhere. In addition, you can access 7 timeframes from one minute to one month, multilingual support in 11 languages, customized user interface, trade news and updates, live chat support, etc.
3. Different tiers of trading accounts
To provide a suitable environment to the traders, the forex broker allows its clients to choose the account type that works best for them. For example, 101investing review provides three account tiers to fulfil the needs of all beginners, intermediate traders and professionals. It offers a silver trading account for novices, a gold trading account for intermediate traders and a platinum trading account for seasoned traders.
As you ascend through various trading account tiers, both risks and higher potential returns increases.
The different trading account allows you to enjoy various services in favorable conditions. For instance, a primary account suitable for a beginner typically offers no commission on deposits and withdrawals, free educational resources, free chat support, full margin call, negative balance protection.
If you climb through premium accounts, you can observe services like dedicated account manager, educational Webinars, VIP webinars, monthly account overview, trading signals via SMS, etc.
To sign up for premium accounts, you need a higher amount of trading capital. If you are a beginner and want to jump on a premium account, the strategy may not suit you. Without experience, if you use large capital in forex trading, you may lose money rapidly.
Apart from that, another important thing you need to remember is the demo account. Please ensure that your broker is providing a free demo account with a decent capital amount for simulation trading so that you can reflect your experience in live trading.
A demo trading can be very helpful if you use it properly. It allows you to trade in different international markets without real money.
4. Deposit and withdrawals
There are several ways for clients to manage their transactions. For example, you can use the preferred method from various options like bank wire transfer, credit/debit cards (Visa, Vpay, Mastercard and more), and payment networks such as Neteller, Skrill, SSL and more.
A good forex broker offers commission-free transactions. In addition, some brokerage firms offer discounts on swap charges in premium account tiers. For example, 25% in the gold trading account and 50% in the platinum trading account.
There should be no commission on the minimum initial deposit. However, be wary of the brokers that charges commission on deposit. The withdrawal process can take up to five days and the common method to withdraw the amount is bank wire transfer. But it should not take more than five days to complete the process of withdrawal.
5. Commission and spreads
Generally, the broker charges no commission on trading assets, plus you do not need to pay additional fees for any transaction. But if your broker is already charging a commission on withdrawals, please make sure that it charges a reasonable commission.
Extra charges are applied for currency conversion and when you hold the position overnight. Beware of false promises of free currency conversion and overnight positions because these are some of the major revenue engines for the brokers. If any broker promises you no currency conversion or overnight fees, the broker is probably a scam.
Spreads vary with different market conditions. Please ensure that your broker offers floating spreads on currency pairs. Because no broker can offer fixed spreads on Forex currency pairs. Due to high volatility in the forex market, there are rare chances of fixed spreads during a trading day. If you see fixed pips of spreads, probably the broker is manipulating the clients in the wrong way.
Leverage is a debt you use to hold a prominent position with less money in the market. The brokerage firm offers you the leverage according to your trading account. You can choose leverage according to your risk appetite and trade size within the designated leverage limit of your account.
The is one of the essential factors that traders should keep in mind because leverage is the most lucrative trading tool. So, most fraud brokers use it to lure traders by showing impossible higher leverages in asset classes. The leverage varies across multiple financial instruments and different accounts with trade sizes.
Typically the forex brokers offer leverage up to 1:30 for retail investor accounts in all three account tiers silver, gold and platinum. For professional accounts, the maximum leverage is up to 1:500.
Do not fall into the trap of leverage mindlessly, and you can lose your all money, including the principal amount. So practice caution while using leverage through a broker.
7. Educational and research support
You can access multiple resources for trading research education on a reputed forex broker’s website to analyze the market and trade conditions. Typically, an online Forex broker offers the basic education material for free.
The basic education package may include articles, videos, previous market reports. But they can charge you for live webinars, trading signals, economic calendars, etc.
Make sure that the education hub of the broker is compatible with all devices (Android, iOS, windows on PC and Mac OS X ) so that you can access it anywhere and anytime.
8. Customer support
Customer support is generally open for 24/5 business days. Traders get in touch with customer support agents via live chat, contact form and email support. In addition, some brokers offer multi-lingual support for clients’ convenience. The helpdesk team members should be well qualified and have the ability to solve your queries immediately.
If you are a professional forex broker and qualified to access a pro account, a dedicated manager will manage your funds and advise you on high potential investments. The dedicated manager should legally be associated with the brokerage firm.
Beware of all the false promises regarding bonuses. If customer support agents keep calling you and manipulating you for bonuses on a fixed minimum initial deposit, avoid them. The reason is that the bonus can be charged as withdrawal fees because some amount of your money is now the broker’s money.
Another important thing is that the broker should keep its client’s funds in a separate segregated bank account to avoid cyber scams.
9. Fake reviews
Various websites put false reviews to tarnish the image of reputed and legit brokers and promote less efficient or fraud brokers. It would be better if you stay away from those websites. Many day traders and scalpers lose money, and they blame the brokers for that.
If someone complains about losing money doesn’t always mean their forex broker is a scam. You can be exposed to a lot of false information on the internet. Be wary of them. The trader might be a loser, and the broker might be legit and vice versa.
So always check the credibility of the information you are consuming online. Both Fake positive reviews and negative reviews can be harmful to your trading journey. Try to read legit public reviews and get into online forums to make an informed decision.
When you go through your trading journey in favorable conditions, it will give you immense satisfaction. For that satisfaction, you should carefully choose your broker and maintain your trading balance efficiently. So if we conclude the above 9 factors, ensure that the broker is well regulated irrespective of its operating region, confirm that all key account features like deposit, withdrawals, commissions, leverage and margins are suitable for you. The broker cannot unnecessary charges you for deposits and withdrawals.
If you are looking for a well-reputed Forex broker, 101investing can be the best fit for you, whether you are a beginner or a professional trader.