The broker is a companion on your forex trading journey. Therefore, only the trustful broker can partner with you for the long term. This article is going to introduce 7 tips to evaluate a broker’s quality and to choose a broker that meets your needs.
1. License & Regulation
Regarding investment, legitimacy is the very first thing to consider. Your broker must be licensed by financial administrations and the more reputable the regulators are, the more reliable the broker is. Some major financial regulators are:
- FCA (UK)
- ACP (France)
- IMFRC (Russia)
- VFSC (Vanuatu)
- MFSA (Malta)
These administrative bodies are responsible for supervising the operation of brokers and protect the right of the traders. Moreover, they can also be a referee when it comes to conflicts of interests between traders and their brokers.
2. Safety of Funds
Your money needs to be safe and sound at all times! A reliable forex broker must have transparent policies on clients’ money handling. To be specific, the broker must separate its fund and client’s ones, each of which should be kept in a distinguished bank account. The purpose of this policy is to prevent the broker from using trading money of its clients for other businesses.
Moreover, a reliable broker should also have insurance for clients’ money. In case the broker encounters financial difficulties, that insurance can return or at least partially compensate the amount that clients deposit.
3. Trading Conditions
Trading conditions refers to trading platforms, leverages and fees that the broker asks for trades.
- Trading Platform: This is the place where you do your trades so it needs to be stable and user-friendly. Additionally, the platform should also be compatible with various device to help traders place orders anywhere, anytime. An example of a comprehensive trading platform is MetaTrader 5 (MT5)
- Leverage: High leverage reduces the required deposit for trades but you need to take into account that higher ratio comes with higher risk.
- Fees: Spreads, commissions and swaps are typical trading fees. They should be as low as possible.
4. Tradable Instruments
Besides currency pairs, a forex broker usually offers CFDs trading for other financial instruments. Generally, a higher number and a wider range of instruments bring you more profitable chances. Some of the popular financial asset groups are:
- Forex currency pairs
- Precious metals
- Crude oils
5. Account Types
Each broker has a set of accounts. It can classify account by the deposit amount or by the trading condition. Based on your trading level, capital and trading target, you can choose the account type that meets your requirements.
Another account type is the demo account. Most good brokers provide this account because it helps traders to get to know the broker’s features and to practice.
6. Payment Methods
A trustful broker never makes difficulties for its client’s payment, especially withdrawal. The broker should accept popular payment methods like bank transfer, credit cards or e-wallets like Skrill or WebMoney. Furthermore, the processing time should be within a few days and no transaction fee is a plus.
7. Support Service
Last but not least, to define the quality of a broker, you need to check its support service. Whether they respond quickly or not, whether they try to help you solve the problem or avoid their responsibility? Can you easily contact them via phone or live chat? If yes, then it is a plus point.
A reliable broker is a combination of various factors. Whenever you want to choose a proper broker, just make yourself a checklist with these 7 aforementioned sectors. If the broker can meet all of them, don’t hesitate and open an account now.