One of the main elements that contributes to success trading the Forex is your broker. There are a number of items to evaluate when deciding on which Forex broker to use. Some of these items may not discovered until you have traded a live account. In this article, I will discuss some of the main factors to research before choosing a Forex broker.
Some of the factors to investigate when looking for retail Forex brokers are: time in business, size of spreads on different currency pairs, if they are regulated and by whom, account types, trading software, customer support, and safety of funds.
Keep in mind as you do your due diligence… This industry has its share of fraud, shady characters, and scams. Although it is getting better because of increased government regulation, you still need to be careful which Forex broker you decide to invest your money with.
Unless you have a minimum of about $30,000 to open an account with, you need to look for a Forex broker that offers mini and even micro accounts. This is important even if you have a large account so that you can experiment and become familiar with the brokers trading platform with smaller sums before trading full-sized lots.
Most Forex brokerages have more than one type of trading platform that customers can use to trade their accounts with. However, I would personally avoid a firm that does not offer MetaTrader (MT4). MT4 is the industry’s most popular platform due to its state-of-the-art offering of a wide range of charting and indicator tools.
MT4 is also created for expert advisor’s (EA’s) which most experienced Forex traders use in one form or another. For example, PipVac LLC uses an EA to deliver its managed Forex signals to its Clients.
Brokers should also provide mobile access and functionality to trade you account. In recent years, with the advancement of technology, mobile trading is becoming increasingly more popular.
The Forex broker you decide to deposit funds with should be highly flexible with respect to account deposits and withdrawals. Forex brokers should accept credit card transfers via Visa, MasterCard and Diners’ Club, along with wire transfers for both deposits and withdrawals. Most best-rated firms also allow various local transfer options.
When doing your due diligence in finding a Forex broker to trade with, customer support should be at the top of the list. The firm should have excellent support and service employees with the ability to respond to calls 24 hours a day during the week in multiple languages. They should also have numerous local phone numbers and email addresses to different departments. A top-rated Forex firm will also have “live chat” capabilities 24 hours a day.
A retail Forex broker should exceed industry standards to ensure the safety of their client’s trading accounts. In addition to various advanced physical and technical safeguards, the broker should also employ rigorous firewalls and SSL technology to ensure the safety of information transmission.
The Forex brokerage you decide to trade with must be a registered and regulated firm. If they are a U.S. based firm, and I highly recommend that they are, then the brokerage should be a member of the CFTC and the NFA. In the U.K. they should be registered with the FSA.
In addition to the firm’s own due diligence, in safeguarding their client’s funds, the brokerage should deposit client’s funds only in the most financially sound banks in their nation.
The brokerage you choose should be beginner friendly with the ability to make low initial deposits. Even if you plan on trading full size lots, start with a mini account until you get a good “feel” for that particular broker’s trading procedures so that there won’t be any surprises when you gear up your trading.
In conclusion, whatever broker you decide to open an account with, they should be able to service any type of trader, whether beginner or seasoned, have excellent customer service, be regulated, and have a general overall image of competence.