Criteria for choosing a forex broker
In order to work at Forex a trader has to make an agreement with an intermediary or in other words - a brokerage company, which has the right to introduce the participants of the market to the world system of trading at the financial markets.
There are many brokers on the market claiming that their conditions are more favourable than those of other companies. Therefore, for a beginner it will be not easy to find a really worthy representative among this abundance of firms.
The first criterion for choosing a broker is reliability. As a rule, this criterion can be determined by the credibility of the broker, his experience in the given segment, availability of liability insurance, license and capability of legal settlement of complicated situations.
Information on specialized forums, reviews of brokerage companies, various ratings can help a novice in this, unless they are ordered by some company, so it is better to collect this kind of information on the websites of independent bloggers.
The second criterion is the size of the down payment or deposit. This is the amount of money you need to deposit to open a real trading account. A lot of traders start their business by risking minimal amounts of money. This makes them look for a broker where they can work with a low deposit size. This approach has its positive side, but it is only effective for those who actually have a small amount of money to risk in the Forex market, as the profit from such investments will be corresponding. A serious broker usually raises the bar for entering the market, preferring to work with cash clients rather than dissolve into the hustle and bustle of "cent magnates". There are even less companies that are able to provide the same friendly service to small accounts and big traders' deposits.
Then there is such an indicator as spread. The wide spread - or the difference between the buy and sell price of an asset - is a large sum of money that goes from the trader to the broker after every trade you make.
You pay a commission regardless of the loss or profit you make on a trade, so you should choose a broker that offers the most competitive spreads.
You also have to consider that some brokers offer fixed spreads, while others offer floating spreads, where its value will depend on the currency market situation.
Next, note the system of depositing and withdrawing funds. A broker should not prevent you from closing a trading account if you are not entirely satisfied with it. A broker is just a custodian of your funds, so there should not be any unreasonable refusals or delays in applications for withdrawal of funds.
In addition, leverage is an important criterion. Its size - this is an important factor to consider when choosing an intermediary. It may vary from 1:1 to 1:500. Everything depends on the broker. Naturally, with higher leverage your profit will be bigger. But do not forget about losses, which will also be proportional to the size of the selected leverage.
Also take into consideration the trading platform. For successful trading you should choose the brokers with the greatest automation of the trading process and minimum human intervention. This is only possible if the broker has a reliable and proven trading platform, which must have a high speed of information processing and stable communication channels. Also, the trading terminal should have current forecasts, analyses and constantly updated political and economic news.
The next factor influencing the choice of a broker is the type of accounts. Many brokers offer more than one type of account. However, there are also brokers who have one package with a lot of options to configure. The number of these types is basically not that important as long as the company provides customizable terms with different leverage and spreads that suit the client.
You should also consider what range of traded currencies the broker offers and how responsive and reliable the support service is.