Dozens of online brokers are offering their services to traders in the Forex market. Whenever you visit a business-related website, there are many internet advertisements put forward by brokers. These advertisements try to persuade you to contact those brokers. This article will discuss five essential steps while considering a Forex broker.
- Agreement of Regulation
First of all, you should check the status of the Forex broker. The National Futures Association is an independent organization in the United States. This institution registers the reputable Forex broker. The Commodity Futures Trading Commission also makes this registration. This organization maintains the commodity futures and other options in the U.S.
A flashy website does not assure that a broker has registration in NFA and CFTC regulations. A broker will show his NFA membership in ‘About Us’ on the website. Due to the safety risk of deposits and the credibility of brokers, accounts will be opened for regulated brokers.
- Check the Account Appearance
Every broker offers different deals to capture traders. Analyze these four features to compare various brokers. These features include; leverage and margin, commission rates and spreads, early deposits, and procedure for deposits and withdrawals.
Check Leverage and Margin Account
A trader should make access to leverage available in the Margin account of the broker. For instance, a broker with an account size of $1,000 can grab a position worth $50,000 by availing of 50:1 leverage. Leverage increases the profit of traders.
Check commission rates and spreads.
Brokers taking commission will charge a specific amount of spread. At the same time, those who do not take commissions will make money by more considerable distances. It will be challenging to make money on wider spreads.
You can use a shallow initial deposit of $50 to fund a forex account. With leverage, buying capacity increases a lot. This feature can attract new traders.
Relaxation of Deposits and Withdrawals
A broker can allow online transactions through Credit cards, ACH payments, PayPal, wire transfers, and bank cheques. While providing these services, the broker may charge some fees.
- Check Currency Pairs offered by the Broker
There are different currencies available for trade. But, major currency pairs include EUR/USD, GBP/USD, USD/JPY, and USD/CHF. These currency pairs enhance the liquidity of trade.
- Check customer services provided by the broker
A broker should offer his services for 24 hours because the Forex market works for 24 hours. Make a phone call to him to check his availability. The phone call will give you an idea of his customer service.
- Check Trading Platforms Offered by Forex broker
Brokers provide investors with access to the market through their trading platform. A trader should verify these platforms and software. These should provide technical and fundamental analysis tools. These platforms contain buy and sell buttons. Interface with poor designation leads to entry mistakes.Learn how to analyse forex charts?
This article covers five main steps to be followed while considering a broker in the Forex market. These include regulatory compliance, accounts offerings, currency pair offers, customer service, and trading platforms a Forex broker offers.