Your choice of the best forex brokers online to work with is vital to the success of your forex trading adventure. It is something you should not take too lightly since opening a forex trading account with an online broker will be like entrusting your hard earned money to a faceless entity or to a total stranger. If this happens to be your first ever online forex trading adventure then you may need a caring and understanding broker who would be more than willing to bend over backwards to nurse you and nurture your growth while you accumulate knowledge and experience on your new found pre-occupation. (There are really not too many of this kind.)
But don’t fret about choosing the best forex brokers from among the hundreds or even thousands of different brokers peddling their services via the internet. All it requires is a bit of due diligence work. It really does not involve much, just a bit of review to make sure you will be in good company while you weave through the intricate world of foreign currency exchange.
To make things easy for you, here are some tips you can follow to make sure you won’t get lost along the way.
- Make sure you will be dealing with a regulated online broker. Being regulated means they are members of good standing or are registered with a recognized regulatory authority. Being regulated establishes the legitimacy of the online broker which means in as far as your investment is concerned, depositing your money with a regulated broker will not be like giving it to a total stranger. Besides, should you end up with any form of complaint, the regulatory body can be your court of last resort. For the US, the recognized regulatory bodies for retail forex trading are the CFTC and NFA. For UK, it will be the FSA. Other recognized regulatory bodies include CySec (Cyprus), ASIC (Australia), ARIF (Switzerland), and SFC (Hongkong). All others may require more in-depth due diligence work.
- As much as possible you should deal only with ECN brokers. ECN stands for Electronic Communications network. ECN brokers, in contrast to straight through processing and market maker brokers, do not trade against their clients. They don’t earn from the bid/ask spread and simply pass on your orders to the network. On the other hand, straight through brokers and market makers earn from the bid spread which often results in frequent slippage during volatile markets. They can also match your order if the transaction happens to be advantageous to them.
- Deal only with the best forex brokers who can provide immediate support through various means of communications including e-mail, online chat, and phone support. It will also be advantageous to deal with brokers who provide mobile trading platforms. This way, even if your computer breaks down, you can continue trading and monitoring the markets through your mobile device.
- Choose a broker with a user-friendly trading platform. Different brokers have different trading platforms. Some are sophisticated and come with a lot of add-ons and plug-ins while others are simple and good enough to get your orders confirmed in real time. The best way to do this is to open different demo accounts with different brokers using different trading platforms so you can test each one and find the best forex brokers among them.