business

Selecting right forex broker – practical tips for beginners

by Josh Biggs in Finance on 31st October 2020

If you clicked on this article, you are probably having trouble figuring out which Forex broker would be the best for you. Also, how do you even decide that? Reading everyone’s opinion on the internet can be tiring, and sometimes inaccurate. Is there even a way to be sure you are choosing the right one?

We will always advise you to check websites that are in charge of gathering data about certified companies, putting them on a list of trusted brokerage firms and fighting against scammers. Also checking the broker list to find the best broker should be reasonably easy, and then you can proceed with things that don’t seem crucial at first, but we will explain why they are below.

What’s your relationship with money?

Think about why you want to start trading; is it because you want to have a source of passive income? Do you want to save for your old days or maybe for your children? Perhaps you simply think the Forex market is exciting and offers opportunities where you could shine, and also make money on the side. What we are saying here is that you should revise what your primary goal is. That’s how you will be able to devise a profitable trading strategy with your broker. 

Do you manage your income correctly?

It’s essential to check with yourself whether you always have some debt by the end of the month, or you have your “rainy day” fund ready, whenever it’s needed. Do you like to spend impulsively as soon as you get paid, or you want to tackle the bills first? Do you have any savings? Are you able to create one? Can you put some money on the side that you will eventually set in your trading account, without affecting your way of living? A professional broker will ask you these questions, but you should check it yourself first. You will be surprised how many things people tend to oversee, whether it’s the coffee, we drink on our work-break, or buying that shiny thing because it was cute (but not necessary, and you knew it would affect your budget for the month). This will help you sort out everything before you talk to your broker, and you will have a bigger picture of your goals.

How much should you share with your broker?

You will rarely find people who are willing to talk about their income with their friends, let alone someone they’ve just met. That’s why choosing the right broker is a crucial part of the process. If you are sure you’ve found the person that will be not only your trading but also a financial advisor, you should be ready to talk to them about your income, savings, the way you spend money and what your goal is. 

How will this affect your trading?

The trading plan depends significantly on the strategy of your broker, and you can devise. We mentioned above that it’s important when you open your trading account not go overboard with it. Many people tend to do so, and then suffer the consequences. Why? Because they invested too much. They even gave the money they were supposed to save for their rent, or only for food on their table. Forex trading should be looked at as another way of side income, not the main one. This is like a savings account, where you need to invest some of your money and time, but going step by step. This way, you can learn better, trade smarter, and maybe discover a better way of trading, meaning a strategy that suits you better as you progress.

In conclusion

While we support preparing in advance, your broker will be the one who will quickly find a way that will benefit you and figure out what type of trader you are. He is essentially there to guide you through the process and be there if you have any questions. He should also be the one to prevent you from making rash decisions (of course, if you do it on your own, you can’t blame him). In essence, he will be a sort of a mentor, as long as you are willing to put trust in him and be realistic about your goals.

Categories: Finance