December 14, 2020 | AtoZ Markets – A successful Forex career begins with a prudent choice of brokerage. A broker is your middleman, as it provides access to the global market. The daily turnover of the currency exchange reaches $6 trillion. Sadly, some traders are only tricked into believing they work on it while their deposits are being misused. Here are five tips to help you choose a trustworthy company.
How to Choose a Trustworthy Forex Broker
Do not even think of trading through an unregulated broker, however attractive their conditions. Leading brands like VNFBS have official licences from watchdog organizations like the CySEC in Cyprus. These guarantee the company’s practices are fair.
To comply, providers need to meet stringent requirements including negative balance protection. That means you may never lose more than your current balance — even when you trade on margin. As many instruments are leveraged, this is vital.
You will not find a company with a stellar reputation but no licence. Responsible operators work within the scope of local law. Choose brands that have been in business for years and serve millions of customers. Check genuine feedback about their services online. Besides, find review sites dedicated to Forex. They publish comparison tables so you can identify the best offer.
3. Transparent Costs
Brokers are divided into Forex market makers and electronic communication networks (ECNs). These systems are fundamentally different in terms of pricing. Market-makers determine the quotes their clients see and include costs of trading in spreads (the difference between Ask and Bid). ECNs, on the other hand, charge a commission per trade.
The second model is more transparent. Unscrupulous market-makers manipulate pricing, while clients have no way of knowing their costs. Still, tight spreads are an essential selling point. If the broker is regulated and properly registered, you need not worry.
4. Customer Support
Poor customer support is a red flag. In the course of your career, you will face problems of technical or strategic nature. Make sure you can contact the broker 24/5. Try calling the support number to see if the centre actually exists. Live chat enables assistance in real-time. Companies also use email and messengers.
5. Demo Trading
If the broker encourages live trading from the outset, this is fishy. The demo mode is an essential feature of all popular trading terminals. With a free account, you may unlock the terminal in its simulated mode. Practise as long as necessary to develop skills for successful live trades.
Other Considerations in Choosing Forex Broker
Decide if you would like to pay a commission or spreads are more convenient. Some brokers offer both types of accounts. If you are going to pursue long-term strategies, make sure the overnight costs are transparent. Muslim Traders may open swap-free accounts to comply with the Sharia law.
Finally, pay attention to the software. Well-established international providers recommend state-of-the-art solutions like MetaTrader. It exists in three forms — as desktop software, a web-based platform, and a mobile app. This gives users the freedom to trade wherever they are.