Finding the Best Forex Broker
Now that you are interested to trade the forex market, the next biggest challenge is: how do you find the best forex broker?
Finding a best forex broker when you have so many to choose from is not an easy task. And for many new forex traders, they are often faced with a lot of questions.
So how do you find the best forex broker when there are so many available and sometimes it is hard to really tell the difference? What do you look for? What do you need to know? These are the kind of questions that many find themselves asking in their quest to find the best forex broker. But guess what? I’m going to make it so simple for you so that you can find your best forex broker in 3 simple steps. Yes, that’s right…how to find your best forex broker in 3 simple steps.
Step#1: Do your research on the forex broker
The most important step in searching for your best forex broker is research. What are you going to research about? Well, here are 6 most important things to find out about the forex broker.
- Is this forex broker registered with any regulating authorities in the country of its operation? So what regulatory authorities should the forex broker be regulated with? In US it’s the NFA or the National Futures Association or the CFTC (Commodity Futures Trading Commission) and In England, it’s the FSA or the Financial Service Authority. Don’t open a forex trading account with a forex broker that is Unregulated. Even if it is regulated in the country of its business, ask this question: what is the political and financial climate of this country? If it is not stable, don’t put your money there!
- Is this a Dealing Desk or Non-Dealing Desk forex broker? Does the forex broker offer fixed or non-fixed spreads? Look at the spreads that they offer-How wide are the spreads? These questions are more significant to those forex traders (scalpers) who like to take quick profits on a few pips. Large and/or variable spreads can cut into the profits of this type of trading strategy.
- Does this forex broker offer services such as charting, news feeds, and market commentary? Does this come free or with a price tag? How important are these services to your trading.
- Well, when you do having a winning forex trading strategy and you are ready to trade live; knowing how much risk capital you have to start with makes a big difference. If you have $1000 or less to start with then you probably want to start trading “micro” lots. Not every forex broker has this feature.
- If you are want to hold positions overnight, then check if this forex broker credit or debit daily rollover interest? Some forex brokers either do both, deduct interest, or neither.
- How much or how little leverage will a forex broker give you? Leverage is a good thing is you know how to handle it wisely but it can kill your forex trading account if you don’t know how.
Step 2: Compare different forex brokers
You next step in your quest to find the best forex broker is to compare the different forex brokers with each other based on the above 6 points listed.
Step 3: Open demo accounts and ask questions and do tests using the brokers trading platforms
Now, that you have compared all forex brokers, try to pick at least two of that fits most of your criteria and you think they are the best forex brokers and open up demo trading accounts. Now trade in different market environments and get yourself to learn all the different features of each trading platform. Use this opportunity to ask questions as well.
You see, you want to have a forex broker that has excellent customer service and can respond to me fast. Think twice about opening a live forex trading account with a forex broker that has a poor customer service.
You will see that most demo trading platforms are very similar to their live counterparts, but there is usually a difference when it boils down to a difference in speed of execution, slippage, and platform reliability (most of the time live accounts are more reliable than demo accounts).
When you do have your forex trading strategy and you are ready to move to a live account, start off small, test the waters, and see if this particular forex broker will suit your trading needs.