Forex brokers: how to choose

Forex brokers abound all over the world with new brokers entering the market every day. So how do you decide to choose a good forex broker?

First of all, look at the way they are advertised. What are they telling you? Of course, they will want to attract their clientele by telling them about the benefits of forex trading and the possibility of making a lot of money. However, they must also be realistic and inform you of the risks. Many traders entering the market for the first time are blind to the risks and “dive” in too early.

Look for a broker that clearly states the risks and, in doing so, gives you some automated protection on your account, particularly closing out trades when the funds in your account risk being insufficient to cover a losing trade. This is particularly important for beginners who may not spot a potentially bad trade until it is too late. Take into account the leverage offered. In the Forex market, we see the highest leverage ratios apply. Typically 50:1, 100:1 or even 200:1. At the low end, 50:1 or 100:1 is typically provided for a standard trade of 100,000 units of a given coin. For smaller transactions of $50,000 or less, 200:1 is the norm. So, make sure you understand how to apply the stop loss and make sure your broker keeps you up to date and applies the stop loss automatically until you gain the necessary trading knowledge and skills.

Look for a broker that has been around a while and can demonstrate a good track record. Be careful with customer testimonials on your website. You have no way of knowing if they are authentic. Look for credentials such as membership of a regulatory body. Are they backed by a reputable parent company?

Look for a broker that offers you a complete service, from tutorials, demo or paper accounts for beginners and full support of charting and technical analysis with a variety of ‘out of the box’ trading systems for you to try and custom systems you can develop for yourself. yourself as you become more competent.

Look for a broker that offers reliability and backup servers. You need to make sure you are in control of your trades 24/7. Does the broker provide a client forum on their site? This is a good sign and gives you an opportunity to visit the forum and investigate issues existing customers may have experienced. If they don’t have their own forum, visit one or two of the popular public forex forums and don’t be afraid to ask questions.

Finally, look at the margin that forex brokers handle. This is how they make their money. Is the spread offered consistent across all currency pairs?