The foreign exchange market or forex market is a global market for trading currencies. This market decides the exchange rates for individual currencies in the international market. The forex broker is the type of person that can help you in this exchange service. The market for foreign exchange is so competitive that a normal individual will not be able to notice that without going to the depth of it. This is why choosing a forex broker can be a very overwhelming task if you don’t know what you are doing.
Based on our research we have found a few key points that you can look upon when selecting a forex broker.
- SECURITY: Security is the most important issue when we talking about foreign exchange. The first characteristics that a good broker should have are to ensure maximum security. It is not wise to hand over your money to a broker only if he claims that he is legit. It is your duty to check if the broker is fraud or not. Thankfully there are many regulatory agencies all over the world that look into these brokers for you. Few examples are:
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA http://www.bankofengland.co.uk/pra)
- Australia: Australian Securities and Investment Commission (ASIC)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- France: Autorité des Marchés Financiers (AMF)
- Canada: Investment Information Regulatory Organization of Canada (IIROC)
Just check if the broker is a member of these agencies or not. Then there is less chance of them being a fraud.
- TRANSACTION COST: In trading, it is normal that you will always be subject to transaction cost no matter which broker you choose. The problem comes with commissions that they are demanding from your every transaction. Make sure you know a bit about different brokers and their rate of commission for different trading. Some times more reliable brokers can ask for more commission for their better hospitality and security. Do not blindly follow the brokers with less commission rate or you might be subject to fraud schemes.
- DEPOSIT & WITHDRAWAL: The only reason a broker might hold up your money is to smooth up the transaction. A good broker will never give you any kind of hassle or misleading information when you want to withdraw your profit. This is why a good broker will make sure that you can withdraw your profit hassle-free and smoothly.
- TRADING PLATFORM: A trading platform is a place where you will most likely do the trading with your specifically selected broker. This is why most brokers should have their own trading platforms. This is why the online trading platform of a good broker must have a very good and easy to navigate user interface. This is also the sign of a good trading site. You can also look for the specific features that you want to experience through the trading site of your broker. A good trading site can mostly help you make an easy and successful transaction.
- CUSTOMER SERVICE: No human is perfect and you should not expect the best possible service imaginable from the brokers as well. But decent customer service is to be expected from your broker when you are giving you your funding. You should look for specific points and services that you expect from your broker. Also, check out how they handle situations when they get messy. Be careful almost all the brokers will be nice to you when you are opening an account but they often change their faces afterward and have terrible after-sales support.
Now if you want to open an account for foreign exchange you can follow these steps:
- Transaction Cost: Make sure that the transaction cost is at such a level that is eating away your profit.
- The reputation of Company: Check out about the service provided by the company and if they are involved in any fraud schemes.
- Platform Provided: The platform must have a good UI.
- Mobile Support: Check if the provider has an app or not that can give you the ability to maintain your exchange throughout your smartphone.
- Ease of Opening an Account: The account opening process must be easy and hassle-free without any complexity.
- Products Available: Look for the product range and varieties to determine if this platform is sufficient enough for most of your products.
- Educational Support: Educational support for better trading must be provided.