Choosing the best forex broker to help conduct your trades can be extremely challenging given that so many of them are competing for your business. Here are some guidelines to help you find the best broker.
- Are they duly registered? While the forex market itself is unregulated, forex brokers are required by law to be a registered Futures Commission Merchant with the independent government Commodity Futures Trading Commission as well as to be a member of the self-regulatory industry group National Futures Association. By dealing only with brokers who adhere to regulatory compliance, you are assured of being safe from fraudulent practices. You can check out the NFA website to confirm the status of brokers you are interested in.
- Look for recommendations: This is actually one of the most reliable ways to find the best forex broker since you have the benefit of other people’s experience. If you don’t know anybody that you can ask for recommendations, you can check out reputable sites that offer reviews of online brokers, or simply search the name of the broker you’re eyeing on a search engine to see what other traders are saying about them.
- Low initial deposits to open an account: Reputable brokers will not ask you for a high initial deposit into your trading account since they want to encourage new clients to use their services. In fact, you should be able to make a first deposit of as low as $50 into your account.
- The trading platform: This is actually one of the most important factors in choosing the best forex broker since the platform represents your away of actually interfacing with the markets. The platform gives you access to currency price data as well as allowing you to make trades. Find one that is easy to use, with clear buttons that allow you to access important functions such as “Buy,” “Sell” and even “Limit Orders”.
- Leverage: Leverage is a loan extended by the broker that multiplies the amount that you can trade in the markets. Leverage is usually expressed as a ratio, i.e. 1:100, meaning that if you have $1,000 in your trading account, you can trade up to $100,000. Check out what leverage options the broker offers you so that you can find one that you can comfortably trade with.
- Lot sizes offered: When you trade currencies, the typical lot size is 100,000 units. However, not everybody can afford to trade this amount, so many brokers offer lots with smaller sizes, usually mini-lots of around 10,000 units. However, some brokers may offer other options that allow you to trade even smaller lot sizes.
- Customer service: Since trading in the currency markets takes place 24 hours a day, the best forex broker should also offer 24-hour customer service to ensure the client enjoys uninterrupted trading so that you won’t miss out on profit opportunities. One way you can check out how good a broker’s customer service is, is by contacting them and seeing how effectively they respond to your call, how long you have to wait before you get a response and how knowledgeable the customer representative is.