Things to Look at When Choosing a Broker
Choosing a Forex broker is never an easy task. First of all, there are hundreds to choose from and every broker, of course, tries to sell itself as good as it can. Next to this, there are just so many affiliate websites that promote FX brokers that pay the best, but which aren’t necessarily the best for the traders. Also, it is important to understand that a broker that is useful for me, might not really be the one that rocks your boat. This is why we have prepared this article that explains the must-have features of every broker with some options ones depending on your trader’s profile.
Regulation
You may often read that the regulation is not important. Don’t trust that. You can often read that a certain broker is “registered” at a certain governing body. This is not enough. What you should make sure is that you are depositing with a brokerage house that has clearly stated its licensing number on its website and that this number can be verified on the regulator’s website. Take a look at Admiral Markets regulation, for example. That’s a company that clearly shows its number of authorisation with FCA and links to the FCA’s website.
The best idea here is to select a broker that is actually licensed and regulated by the governing body of the country of your residence. Also, if a broker is regulated in a certain offshore territory, a country like Marshall Islands or Belize – best to pass on it.
Trading software
If you are a seasoned trader, learning a new trading platform may firstly seem exciting, but in reality it is just a lose of opportunity. If you are just a rookie, you don’t really want to get some basic knowledge of 10 different platforms but you would rather pick up one and master it. This is the way to progress in trading and that’s why you should pick up a broker that offers the software you need. Typically you might be just going for the standard MetaTrader 4 (MT4), as this is the most popular platform for currency trading and is offered nearly by any broker. Alternatively you can try cTrader, as it is the main rival that comes with better User Interface and larger scope of features.
Trading conditions
You don’t really want to overpay in spreads and commissions, especially if you are a frequent trader. Having said this, be sure that the cost of trading is strongly correlated with the quality of service you get. If a broker does not earn much on your trading, be prepared to wait minutes in the queue in order to get supported. In simple words – you should look for attractive trading conditions, but not too attractive.
From the other side, you should not really pay attention to the instruments you are not trading. Brokers’ conditions might different substantially depending on the asset. A broker that has the best spread on EUR/USD may not have the best offer on AUD/USD.
Summing it up
Choosing a broker is quite a challenging task if you want it to be done right. This is why the regulation and trading software should always come first, even though the trading conditions are important and will be reflected in your costs, this is not something to save up on.
Categories: Commodities, Hedge Fund, Investment Wisdom, Retirement & Savings