The purpose of the forex broker is not really restricted to providing you a trading platform which helps you trade with ease. Your broker is your connection with the markets. The broker is essentially responsible for providing you the cover that allows you to trade with margins. Needless to say, as a trader you need to exercise due discretion while you are actually in the process of selecting the online forex broker. And, what exactly are the factors that you need to keep in view? We will discover in the course of this post.
Factors that you need to consider while you are in the process of selecting a broker
Are you too confused about the right steps to take when it comes to selecting a forex broker? Don’t be—since we’re here to help.
Find out if the broker is regulated or not
There are a lot of unregulated brokers functioning in the market. You should be prudent enough to avoid them since there is every chance of them “vanishing in the air like a puff of smoke” after you have spent a substantial portion of your hard earned money. So, find out whether the broker is regulated or not. There are different regulatory bodies governing the currency markets of different countries. So, you should, at first, find out about the apex regulatory body governing the Foreign Exchange Market in your country (if don’t already know about it) and then find out if the forex broker consulted by you is regulated or not.
For instance, if you are trading in the US, then you would want your forex broker to be registered with Commodity Futures Trading Commission (CFTC) or National Futures Association (NFA).
Does the forex broker offer you a reliable platform? Are the services of the broker backed by financial software which allows you to trade from anywhere you want? Or is the platform mostly “offline”? If yes, then you might as well end up facing major problems – simply owing to the fact that the forex market functions 24 hours a day. And, if your platform doesn’t work all the time then you could miss out on opening or closing a trade at the most opportune moment.
Margins or deposits
Let us tell you that the forex margins differ from broker to broker. If you are able to trade with low deposits then you can benefit by profiting from higher leverage.
What is the size of trade that you are allowed to trade with?
Once again, the trade size varies from broker to broker. A standard lot consists of 100,000 trading units of a currency. There are some brokers that offer you fractions of lots.
One of the best ways to investigate the credentials of the broker will be to ensure that you are actually going through the online forums in a bid to find out what the forex traders have to say about the quality of services offered by brokers.
Do keep these points in view in order to be duly guided.
Author Bio: Sam Payn, a well-known industry blogger, is enthusiastic about sharing valuable tips on Forex – his newfound love. Many of his blogs focus on the need to choose the right online forex broker.