Often when considering entering the world of forex, you have the stress of learning how to trade, as well as coming to the right decision about what forex broker you should actually choose and go with. Knowing how to find the best forex broker is not an easy decision, as no doubt you will need to address many factors beforehand, in addition to understanding what to expect from trading your capital and how to actually withdraw it.
There are many scams within the forex industry, and it is important to trust your capital with the right broker, or else all your strategies would have been for nothing otherwise. For this reason, we have prepared a series of tips that should help you select the best forex broker for yourself, that meets your needs without any exposure to scams.
Consider what your needs actually are
The first thing you need to do is look at your own needs and identify what you want to achieve from trading. Will you be hoping to trade in large amounts or small? Are you planning on making large moves at first, or slowly paving your path with experience and time? These questions are essential to ask yourself, as you will be needing to base your decision moving forward, around these questions addressed, make sense?
When you trade, you will probably consider an ECN broker. This will pay commission on trades made, however the spread will be quite tight when you are trading small at first. You should only search for ECN forex brokers here. Yet, it may be that you do not actually think you need one. For that reason, you should have a large pool of other brokers that you can turn to instead.
Address that beginning capital that you have to trade with at the beginning. Should you have a healthy amount, you could make small micro trades, throughout the day. It is only suggested to open a standard account, when you have a minimum of £50,000 as capital to begin with. Therefore, the broker you pick will first be based around the capital that you have. It is important that it matches and harmonises. You should also consider the policy of withdrawal too, as brokers will differ depending on what their policy is and their methods of withdrawal. Make sure you double check the fine print on that!
What should a broker offer?
Now that you have identified what you want and need, you will need to narrow down your list of brokers that are available out there. As a day trader, you need to make sure you are working directly within the market and not and not sending your orders via a trading desk to initiate within the market. You will be killing lots of time if you go about it via this route. You will also find that the result will be a re-quote most of the time, from when you place an order. When you place an order, you may find that the trade opportunity will have elapsed due to all the time wasting in between.
To go about this in the right way you will need to first make sure that your broker is regulated within the country of residence that you are trading in. The establishment needs to be a verified financial system too. The best brokers are the ones that are regulated within the US and UK, Canada, Australia and New Zealand. Anywhere in between will see you having to settle for just below the preferred market that the brokerage market thrives upon and what you see in the financial headlines of CNN, Yahoo etc.
As a day trader, you need to demand the spreads that are competitive. If you are trading in two currencies, you will need to expect that the pips will be closed with a non-ECN account. If you see two pips, that will be too high and thus you need to forget about that option entirely. The spread should only be at half a pip for situations such as these. So, make sure you observe the spread upon your selection. Usually, a demo account would be the best way for you to test what the broker you are interested in is offering. You can ask all the technical questions and see what their actual response is. The customer service reflects how well a broker platform actually is, so make sure you take note!
When you are searching for a broker, you will need to check up the reviews of the broker within the forums, where other traders have used the services too. This should be your first indicator of whether or not you should trust a source of brokers. There is a chance that you will find fake reviews online, so you will need to research that they are in fact from credible sources. Usually if you see both positive and negative comments, that are balanced and varied, it’s trustworthy, and you should find it no problem to use.
It is normal to see reviews that talk about the loss of money, as trading does entail in a loss of money. Some traders will leave reviews with a hint of bitterness due to the loss of money, so make sure you take that into account. Complaints about losing money does not reflect that a service is bad, as losing money is inevitable when using a broker platform.
It is actually very important to ensure that when you open a live account, you avoid the bonuses that come with it. These forex offers can often be like £1000 account credit, for £100 bonus cash. These are not actually free, and in fact will disrupt with your withdrawal capability. Not many know this, but the money you receive in the bonus is the broker’s money, and it can make it difficult to trade and withdraw winnings immediately as you normally would hope and want.
After doing everything we have instructed you to do within our list, you should find that the selection of your list will be far smaller and simpler. We would highly suggest that you test them out, each and every one on a demo account and check out the trading conditions that come with each of the demo accounts. That should be a great indicator of what the platform is like, and how you execute your spreads on the platform. Note to self, they should be stable and tight!
It is often advised you to test an account for up to several weeks before a live account is opened. This will ensure that you are on a well-working account that can be promising. It is also advised that you do some fractional trading rather than putting your whole amount in, just to see how that responds. Makes sense?
After that trade fractional for at least two weeks, to observe how it all goes for you within your live account. If there are any issues, it is your chance to seek customer support and help. Make sure to initiate a withdrawal too, to see how it goes ahead, and if there are any fees integrated.
If all the steps seem good here, you are very much good to go!