February 20, 2021 | AtoZ Markets – New traders are always welcomed with massive amounts of advertisements, offers, and noise from online forums as they look to trade currencies. So, there are important things to consider as people choose a forex trader. After all, a forex brokerage’s primary work is to let traders place an order with the liquidity provider.
Forex Broker Must be Regulated
The most vital thing to focus on is to check if the forex broker is regulated or not. Also, it is crucial to know where they are regulated, as not all regulatory bodies are equal. Thus, some traders fall into less than reputable brokerages because of this reason.
The regulation enables traders to feel somehow protected because a governmental agency pays attention to what the forex broker is doing. Before, forex trading was relatively new for retail traders. And many nefarious firms are willing to take traders’ money. After that, there has been a tightening and maturation of the industry. As a result, nearly all brokers are regulated at this point. And if they are not, that is a red flag, and people must avoid them at all costs.
The Products they Offer
People need to know if the broker offers the markets they plan to trade. For instance, if they wish to trade the CAD/JPY pair, the broker must deliver it. Remember, not all brokers offer all currency pairs. Some brokerages offer as few as ten pairs, and some have hundreds.
Then, several more institutional-based liquidity providers and brokerages can offer several hundred, opening the opportunity to trade exotic currencies. Just make sure people will get the product they are looking for before filling out the paperwork.
ECN Vs. Dealing Desk
An ECN (Electronic Communication Network) matches orders directly with each other, making a transparent and fair marketplace. On the other hand, dealing desk brokers will either match orders or trade directly against traders. Reputable brokers will follow the guidelines and rules of the regulator and treat traders fairly regardless.
If people chose ECN brokers to facilitate the orders, they would charge less and spread, but with a commission. Still, it’s pretty much a wash as to the cost of the trade. An area that ECN works better for is scalping. And this is because it lets a quick in and out trades, and they don’t have to think about any lag time at the desk.
Several brokerages offer expert analysis, while some don’t. And this all comes down if traders need some help to form trade ideas or comfortable trading on themselves. Nevertheless, many places online are there with a lot of analysis for free.
Several brokerages can go beyond the typical calendar and announcements and offer many extras. There are times those become deposit bonuses, and sometimes they are webinars or trading education. But all of these are free online. However, a few brokerages have quite nice educational sections as an example.
Similar to other businesses, the better they treat their customers, the longer they stay in the industry. With that, generally, people must feel more comfortable with a brokerage that stood up for ten years instead of the one that started this year. But if they are appropriately regulated and based in a strong, financially mature country, it’s okay.
Traders must read as many reviews as possible. Remember to take them with a grain of salt as trading is emotional, and some people will negatively review brokers after losing money – which is not the broker’s fault. Above all, traders can see through these negative posts as they usually are a bit over-the-top.