You might have read some other articles relating to the best forex brokers for beginners, but I ensure this article is still worth reading as it includes the unique and strange facts which no article can show you.
Being the biggest market in the world, the forex market whose turnover can easily reach over $4 trillion per day has no central exchange for it. As a result, when trading forex, traders have no choice but depending on the brokers’ services to help them execute a trade. From that, we can see how significant it is to choose a perfect broker to trade with.
In this article today, we are responsible to give you some which are used for considering the best forex brokers. Such criteria consist of the forex platform (software), customer service, regulatory oversight, account types, commissions and spreads, deposits and withdrawals.
The Forex Platform (Software):
Forex platform is the gateway for a trader to enter into the forex market. Thus, it must be credible and easy to use. Also, it must provide you with a variety of trading tools, e.g. clear charts, streaming news sources, economic calendars, etc. so that you can analyze the market. Additionally, the interface of the forex platform has to be designed well, having all functionalities labeled clearly as well as placed strategically.
In case a forex platform is designed poorly, it can lead to unexpected mistakes. For instance, it may waste your time and even money by causing you to go long on a position when you want to go short or adding to a position when you want to close a position.
In short, what you need to note here is making sure your broker provides you with a trusted forex platform. According to our experience, the two most reliable forex platforms are MetaTrader 4 and Sirix WebTrader.
The best forex brokers should be available 24/24 so that their traders can encounter problems at any time, because nothing can make a person more frustrated than being unable to get assistance at the time he or she needs it most.
As a trader, you need to check whether or not it is available for you to contact broker’s support team via email, live chat, or phone calls, etc. Then, you have to review the response time of the representatives who are responsible for supporting customers. Besides, you must consider whether or not your broker gave you a localized phone number which you can call for free.
As you may know, the forex market is not a regulated place. Thus, it is necessary for you to trade with a regulated broker that can operate with transparency and fairness. The most important thing to remember here is that the regulatory oversight for a broker is only applicable for the jurisdiction it is based in. Let us give you some examples. An U.S. forex broker is required to be a member of NFA (National Futures Association) as well as be registered with CFTC (Commodity Futures Trading Commission). An UK forex broker is registered with FCA (Financial Conduct Authority). Such regulatory agencies will protect the interest of traders and develop the rules for dictating the methods which brokers should use to conduct their operations. Also, regulatory agencies are useful in promoting competition and instilling reliability in the forex market as they have the ability to prevent abusive practices, fraud and manipulation.
Besides, lots of regulators provide a compensation scheme for their investors. Such scheme will protect investors from insolvent and overly exposed to the markets when depositing up to a certain level.
When starting trading forex, you will be in need to choose an account type from the selection of trading accounts provided by your broker. Each type of account has its own strengths and weaknesses and is differentiated by the benefits it gives traders.
Example: Micro account allows traders to trade with smaller lot than standard and requires low minimum deposit. Also, this type has higher leverage. However, it also has disadvantage which is high spreads.
Trading accounts can also vary on the basis of spread types: some have fixed spreads, some have variable spreads. Sometimes they can be commission based trading accounts.
Commissions and Spreads:
The income of all forex brokers comes from the spreads and commissions that they charge their traders. For the trades based on commission, the commission is often a fixed amount for each lot traded or a percentage of the total volume traded. For the trades based on spread, the spread can be either fixed or floating amount. There are generally a few pips marked up in the difference between Ask price and Bid price. One notable thing here is that you may meet more difficulties in making profit in case the spread is wider. However, you should not worry too much as frequently traded currency pairs like EUR/USD and USD/JPY usually have tighter spread than others.
Deposits and Withdrawals:
Different brokers will have different policies to handle deposits and withdrawals. For some brokers, their traders must use direct bank deposit to fund their trading accounts. For some others, they have a wide range of payment methods for their clients to choose. Here you need to take note that no matter what payment methods are supported, you should choose a broker that can offer a convenient and inexpensive way of payment.
In a nutshell, considering which broker is good and suitable to trade with is a hard task for traders, especially for beginners who have less knowledge and experience. However, with all necessary details we have already showed you, we hope you can easily find a perfect broker that can help you on your way to achieve success in trading forex.
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