The foreign exchange market is considered the largest financial market in the world. When you feel you are ready to get started in this competitive market, you will have to choose a reliable broker to guide you throughout your financial journey. With a large number of firms currently operating on the market, it can be an overwhelming task for the beginner. I had to face this decision myself once. My name is Jack Walsh and I am forex trader with 7 years experience. Here are my 5 useful tips to help you choose your Forex broker.
My personal advice to each novice trader is to check if the broker you are planning to deal with is regulated or not. A great number of brokers claim to have their headquarters based in UK, Ireland or Switzerland. However, if you decide to make some research on the specialized websites like Forex Peace Army, you might be surprised to find out that broker which approached you recently is actually situated in the Marshall Islands. Basically, it means that they might not be governed by any respectful financial regulator.
Check a list of countries with their respective regulatory institutions:
United Kingdom: Financial Conduct Authority and Prudential Regulation Authority
Switzerland: Swiss Federal Banking Commission
Germany: Bundesanstalt für Finanzdienstleistungsaufsicht
United States: National Futures Association or Commodity Futures Trading Commission
Canada: Investment Information Regulatory Organization of Canada
Deposits and Withdrawals
Imagine if you will have a situation when you will need to withdraw your funds as quickly as possible. Life is full of unpredictable situations and you should be able to access your funds without any additional hassle. Always ask your broker’s customer service how long will it take for withdrawal request to be processed in your bank account. Brokers really have no reason to hold your funds except if it is a scam company. Normally, the withdrawal procedure should take 1-3 working day. It depends on your bank when exactly you will receive your funds after the withdrawal is processed by your broker.
Forex market is open 24 hours a day from 5 p.m. EST on Sunday until 4 p.m. EST on Friday. It means that good FX brokers should provide support within this period of time. Before investing in the specific brokerage, try to ask some questions to their support team by emailing, calling or chatting with their representative. For instance, you can ask how long have they been on the market, what is the minimum amount to start with them or who are they regulated by. You will get a basic idea about their representative’s capability of answering your questions. Also, pay attention at the time needed to get a response from them.
Spreads and commissions
Each time you do a trade you will have to pay either for a commission or spread. A broker gets its profits through commissions and spreads. Currencies are traded in pairs. Spread is the difference between the buying and the selling price. The spread should not be larger than 5 pips for major currencies like EUR/USD, USD/JPY, GBP/USD. Basically, the wider the spread the more difficult it will be for you to make profit. So, it is reasonable to look for lower spreads and commission rates.
When choosing a broker to work with, always check which platform do they offer. The platform must have a pleasant visual look, user-friendly and simple to use. It should also have a range of analysis tools. It should be easy to enter and exit trades without taking any additional steps. Bad user interface will surely cost you your funds and time. MetaTrader4 is considered one of the best trading platform nowadays and is used by a great number of FX brokers.
Unfortunately, I am unable to advise you the best forex broker in the world. There is no such thing. However, here are my top of forex brokers judging from my previous trade experience:
- FxPro. They offered me a grate variety of trading platforms to choose from. Aside of MT4, they also include MT5, FxPro Markets and cTrader. All their platforms are user-friendly.
- AvaTrade. Their Customer service team is the most proficient from all that I had the occasion to deal with.
- Oanda. Their spread offerings are tempting. For currency pairs, the EUR/USD pair can be as low as 1 pip.
- Markets Cube. There was a situation, when I needed to withdraw my funds quickly and they processed my withdrawal request in just 3 days which is considered fast in comparison to other brokers. However, please be warned that this broker is not regulated by any financial authority.
- InterTrader. It is the broker I am currently working with. Despite my forex trading experience, they offered me a free pre-deposit guidance and I managed to learn many useful strategies. This broker can be considered as the best choice for a novice trader.