Forex trading promises vast rewards. You’ve definitely seen many flashy titles that you can build wealth by trading Forex. Now, while this is somehow an exaggeration, trading foreign currency can truly bring you significant rewards. Yet, this rarely happens overnight. To become a great trader, you must take the time to learn the market, its insides, the best trading strategies, and the best tools.
But, much of the success found with trading Forex also depends on the broker you choose. The reliability of the broker, the trading tools they offer, as well as the support you get, especially as a novice trader, can make the difference between significant winnings or losses in the Forex market.
So, when you are new to the Forex market, a crucial step to take is to look for the best broker. Now sure what to look for when choosing a Forex broker? Keep reading below!
- Demo account
First, since you are new to the Forex market, the number 1 thing you should be looking for when choosing a broker is whether they offer demo accounts.
What is a demo account? Well, as the name suggests, a demo account allows you to test your trading skills without losing any money. Using a demo account will not only help you get a taste of the Forex world without the risk of losing money, it will also help you test the speed and seriousness of the broker.
You can see how the trading platform works, how fast the broker provides customer service if needed. And, most importantly, you’ll gain some experience in trading foreign currency without investing your money.
- Security features
In a world where cybersecurity threats are multiplying by the day, and your money is on the table, you’d likely want to know that your funds are well-protected. So, one of the most vital things you should pay attention to when looking for a broker is whether or not they have a high level of security. After all, you’re not going to give someone hundreds or thousands of dollars if you’re not 100% sure that they can protect it.
So, it’s a good idea to find out what security measures the broker has put in place to protect your money and transactions.
- Reliability and reputation
Another important thing to check is how reliable the broker it. Once again, you wouldn’t give your money to someone without making sure they are legit first, right?
So, before choosing a broker, do some research on their reputation to find out how reliable they are.
You can start by looking for online reviews. Reading other traders’ opinions on the broker is the best way to determine whether they are or not trustworthy. If there’s something fishy about a broker, you’ll definitely find what’s wrong in an online review.
Besides checking the broker’s online reputation, you also need to check if the broker is regulated by their corresponding regulatory body. For example, in the United States, the regulatory bodies are the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). In the United Kingdom, the regulatory bodies are the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
Depending on where you live, check the name of the regulatory body and see whether the broker is regulated or not by that body. If not, the broker is likely a fraud, and you should not trade with them.
- Transaction costs
Like it or not, no matter the kind of currency you are trading, you’ll have to pay some transaction costs to the broker.
Every trade you make will require you to pay for either the spread or a commission. So, it’s only natural that you should choose a broker with affordable rates.
Yet, keep in mind that cheap rated don’t necessarily mean a good broker. Sometimes you may have to pay more for the transaction costs for a more reliable broker. So, while the transaction costs do matter, don’t prioritize them when choosing a broker. Prioritize reliability and security.
- Trading tools
As a trader, particularly as a novice trader, you can benefit from the trading tools offered by the broker on their platform.
What tools should the broker offer? From economic news calendar to pip calculator tool, currency correlation tool, or a Forex time zone converter. These are all tools that can help you make better and informed trading decisions.
It would be best if you also looked for the best ECN Forex brokers because these brokers use a network to provide traders with direct access to other participants in the market. In other words, an ECN broker can consolidate quotes from several other market participants, which offer you tighter bid or ask spreads.
- Deposits and withdrawal
Reliable brokers will allow you to deposit funds and withdrawal your income hassle-free. There’s really no reason why a broker should make these two processed difficult for traders, especially when it comes to withdrawing your profits.
When reading online reviews, pay attention to what other traders say about the withdrawal process offered by the broker. Is it speedy and smooth? Or is it a complicated and time-consuming process? Obviously, you should choose a broker that makes withdrawal easy and fast for its clients.
- Customer support
Troubles can happen all the time, especially in an industry susceptible to technical failures. So, it’s not important to look for a flawless broker, mainly because you won’t be able to find one. What really matters is to find one that you can easily contact when problems arise.
It’s essential to trade with a broker with the competence of dealing with an account or technical issues fast and efficiently.
So, look for a broker that offers multiple customer support channels, such as email, phone number, on-page chatbot, live chat, or social networks. A Forex broker who provides various customer service channels is more likely to be reachable and helpful when you encounter a problem with your account or their platform.