When you get down to the business of choosing a forex broker, there’s a lot to think about. In fact, of the dozens of factors to consider, five stand out. They can make or break an informed person’s decision about what platform to choose for daily trading. Here are more details about each of the five criteria.
Reliability and Reputation
It’s true when you choose any product or service provider that the company’s reputation means a lot. So does its reliability, but reputation should come first on your research list. How do you learn about a forex brokerage’s reputation? Check out several of the top review sites and see what current and former customers think. You have to be a bit careful here because some of the sites are bogus. If you’re like most people, you already know of a few trusted places you can go for honest reviews. While reading through people’s comments, see what they have to say about reliability, namely the broker’s ability to execute trades on time and for the correct amount. Try to see what customers say about overall reliability and about specific topics like response to customer inquiries, resolution of problems that come up, and the amount of website downtime that occurs, if any.
The list of trading conditions that forex enthusiasts should look for include low or no minimum balances, comfortable trading leverage, low fees on transactions, and a lack of add-on charges and expenses. Why do you want and need these conditions? Because they allow you to do what you do without having to fork over a substantial sum of money. For instance, if transaction commissions are large, you’ll find yourself constantly struggling to make highly profitable trades just to eke out a minuscule profit. Unless you’re wildly successful, commissions can eat up your bottom line rather quickly. Minimum balances are not as bad, but who wants to sign on with a brokerage firm that requires a $1,000 account balance before you can begin buying and selling currency pairs? The answer is no one.
Likewise, the best forex platforms will offer you a significant amount of leverage. That means your $50 investment might be able to control 20 or more times that amount on a given trade. Leverage is the most potent tool you have for making large profits on small investments. Before you sign on with a broker, make certain that you clearly understand how much leverage you’ll have from day one. And if the website isn’t upfront about the issue, email or call to find out.
Selection of Instruments
The term instruments in the world of investing refers to things like stocks, bonds, foreign exchange currency pairs, precious metals, options, futures, and more. Our focus is forex, so what we’ll be looking for is someone who allows us to choose from as many pairs as possible. At a minimum, you’ll want access to the majors, namely the following pairs: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, NZD/USD, and USD/CAD. The vast majority of daily volume takes place in the majors. Plus, from an individual’s point of view, these pairs are ideal instruments because they’re very easy to research, are often in the news, and have the highest liquidity of all.
Find out what platforms will be available to you. Some of the newer forex brokers only offer one, and that’s an in-house version that might not be suitable for your style of doing business. The good news is that many have versatile offerings that include the classic, best-known platforms. This is a key consideration because without an adaptable, versatile way to buy and sell, you might find yourself stuck in a rut. It’s usually simple enough to investigate this point just by visiting the main website.
Resources for Traders
Look for a provider who has extensive research, charting, news, and other resources. This point is especially vital for newcomers. Earning a profit in the markets is all about being informed and having the freshest information possible. Foreign exchange, more than any other trading instrument, is highly dependent on world news and current economic trends. If your information source is delayed even by an hour, your chance for profiting on a deal will decrease considerably.
Other resources include things like simulators, on which you can practice with fictitious money as you learn all the ins and outs of the order-placement systems. It’s also wise to check into whether you’ll have access to educational webinars and tutorials on important topics. Some providers offer extensive training for newcomers in addition to use of a simulator.