How to Choose Forex Broker

by Jonathan Adams

One important thing in Forex investment is to choose a broker. Broker can be individual or company which become mediator between you and the market. The thing is that choosing a good broker can be a difficult task for the trader especially when you are novice. There are many brokers who claim to be the best and the cheapest broker. But all you need is a broker who is reliable among those brokers. To find a good, reliable broker itself can be tricky; therefore you need some criteria to pick the best one.

Broker is very crucial in helping you in the trading. Make sure that you chose broker who offers low spreads in major pairs. Spread is the difference between the bid and ask price of a particular currency pairs. The spread is the commission for the brokers. There are three commissions regarding the spread which are fixed spread, variable spread, and commission based on a percentage of spread.

The next thing to consider is the leverage. You have to really understand the leverage offered by your brokers because the leverage can be give you profits and also losses. You have to handle and control your leverage in order to gain more profit. Many brokers offer bigger leverage which can give you potential profits but you have to choose it based on your investment strategy to avoid a big loss.

The brokers are there to facilitate you in communicating with the banks to selling and buying currencies. Choosing regulated and reputable broker is also a significant point in selecting a good broker. Most registered forex broker are reliable since their name is under regulatory authority such as Futures Commission Merchant (FCM), Commodity Future Trading Commission (CFTC), National Futures Association (NFA). Those authorities exist to protect the investor against fraud, manipulation, and illegal trading. Although it depends on the investor himself to choose regulated or unregulated one, the security is essential to protect you from the fraud. Check the broker’s regulatory status and financial background to ensure that you are choosing the right broker.

In addition to that, you have to consider is the account size. You need to know the minimum balance to open a trading account. It is also important to know since it is related to the use of mini and micro accounts. Mini account requires small amount in your account and works with low pip value.

In conclusion, choosing broker is more personal decision. If you feel that you are uncomfortable and unsatisfied with your current broker you can always change your broker. The brokers exist to help you in trading after all.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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