Choosing the Right Forex Broker

How to Choose the Right Forex Broker for Your Trading

Success in forex does not depend on just the trading skill or in possessing a huge arsenal of success strategies a trader can muster.

Using the right forex broker will play a huge part in the whole process. Brokers play several key roles which range from acting as the depository for a trader’s capital, providing the electronic platform on which trades are made, providing clearing and settlement services for these trades as well as channeling market information to the trader using the news bars. A trader must therefore make a very informed choice of not just a good forex broker, but one which is right for the trader’s situation. Traders are different and just like the human fingers, no two traders are equal.

The following factors deserve consideration and will guide the trader into choosing the right forex broker for the trading adventure.

Regulation:

Regulation of forex brokers serves two purposes. Firstly, it ensures that such brokers follow the requirements of the regulators in operating a segregated account where all trading funds belonging to clients are warehoused, separate from the operating accounts of the broker. These segregated accounts are subjected to intense scrutiny and ensures that at no time will brokers be tempted to dip their hands into traders’ funds to run their brokerage business. It also prevents loss of traders’ funds in the event of bankruptcy.

Secondly, regulation provides an avenue for recourse when there are issues. There have been cases where aggrieved traders were given reprieves by regulators when it was proven that they were wronged by their brokers. Without regulation, traders are left exposed to all manner of unwholesome practices. A visit to websites like ForexPeaceArmy will showcase why it is so dangerous to trade with unregulated brokers.

Trade Conditions:

Regulation is not always enough. You need to know if the broker’s trading conditions are right for you. Trade conditions will cover issues like minimum account opening balance, minimum trade size, account type, leverage, margin requirements, etc.

For instance, some brokers will only provide minimum trade sizes of 0.1 lots. This is not suitable for those with small accounts. I give an example. FxPro has a minimum trade size of 0.1 lots. Alpari UK has a minimum trade size of 0.01 lots. Both allow traders to deposit as small as $300 in their trading accounts. Now while both brokerages are regulated and offer some of the best world-class services I have seen, it is obvious that the 0.1 lot account minimum requirement will not be suitable for a trader who is starting off with just $300. If such a trader were to have $1000 to start off with, then it would be a matter of choosing any one of the two brokers because such an amount can handle the trade requirements.

This is therefore a clear-cut example of using only brokers whose trade conditions are right for you as an individual. Remember, we are talking about the “right” forex brokers and not just the good forex brokers.

Responsive Customer Support:

The customer support of a forex broker needs to be responsive to questions and inquiries their clients may have. Furthermore, this has to be in a timely manner. I once had an issue with a trade I placed with a broker (Ava Financial Ltd). Even though the issue was not resolved in my favour, someone from customer service took time to explain to me what had actually happened in the trade, and why I suffered the slippage I had.

Another time when my trade was not closed out at my Take Profit level, I spoke to their customer support and the issue was resolved in my favour, with lots of apologies to go with it. It was gratifying to know that there was a customer support that was there and could be reached with any issue, no matter how trivial or how silly it may have sounded. This is the kind of customer support you need to have as a trader.

Transparency:

I have just given an example of transparency in the previous point. There have been examples of brokers who would clean records of such profitable trades just to make the trader look like the liar. Ava Financial Ltd did not do this. That is transparency. A transparent broker is the right broker for any trader.

Conclusion

You can make or mar your trading by choosing a wrong broker, even if the broker is regulated and seems to have all the trappings of what makes trading work. Choose a broker for you and not just one based on name or brand. This site has a list of brokers that you can choose from. They are all very good and you will surely find one which will suit your needs. To see a full list of forex brokers, see this page.

Adam

More About

Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

View Posts - Visit Website

Leave a Reply