The forex markets trade over $4 trillion daily, providing ample liquidity and forex trading opportunities across dozens of currency pairs. As gold prices weaken, it is a good time to be bullish on currencies with negative correlations to the yellow metal. But in the same way, a gold miner with inefficient panning tools can watch gold profits slip away, an FX trader without the right forex broker set up can lose money.
Even the most adept trader can lose money without the right trading environment. High transaction fees or wide spreads can make the difference between a profitable and unprofitable trading position. Fortunately, as an FX trader, you have a veritable feast of broker options before you. In the competition to be the best forex broker to win your business, brokers are competing to provide the most attractive fees, spreads and perks.
The Forex Broker Shopping Checklist
A good place to start your search for the best broker for trading forex is with forex trading reviews. By carefully sieving through broker offerings, you can improve your trading odds and reduce the risk of loss. When evaluating which broker is best for you, you should consider all of the following features:
- Transaction fees – Fees can quickly eat into your trading profits. If you trade low volumes, you may be happy with a fixed low trading fee. For higher volumes, fees that decline as trading volume increases can significantly lower your trading expenses. Shop around and you can find no commission brokers.
- Spreads – Broker bid and ask prices can vary greatly. Tighter spreads are a common premium feature offered to accounts with higher minimums. The trading platforms with the best spreads will be the most liquid.
- Security – Two-factor authentication is becoming standard for forex and other investment websites. Accounts that choose this option are less likely to be hacked.
- Account minimums – The minimum investment required has a large influence on broker choice for most investors. Brokers with higher minimums typically provide more premium services. Perks could include lower transaction fees, tighter spreads, and dedicated account managers.
- Trading margin – Most US brokers will offer a trading margin of 1:50. This means if you have $100 in your account, you can trade up to $500. A higher trading margin is a tip-off that the broker could be offshore and unregulated. In the US, for example, the margin for trading in the major currencies is 1:50 and 1:20 in the minors.
- Funding and withdrawal – Check the withdrawal options, minimum withdrawal amounts, fees and processing times, which vary across brokers.
- Types of orders – All brokers will offer the standard market, stop and limit orders. Trading bots are all the rage and brokers are competing more aggressively with advanced automated trading tools.
- Expert Advisors (EAs) – Whether or not you currently use expert advisors, you likely will in the future. MetaTrader provides the largest choice but, most importantly, your EA should perform the functions you desire.
- Support – Does the broker offer customer service or dedicated account managers?
- Regulated broker – All other features could be irrelevant if you are the victim of trading scams. Check the regulated status of your broker with the local forex market regulator. In the United States, you may check whether a broker is regulated on the National Futures Association website.
Why Choose a Regulated Broker?
Each day regulators around the globe blacklist an unregulated broker, yet the next day new ones appear. Many of these brokers are not even located in the jurisdiction in which they are selling forex, CFDs and other securities.
As an FX investor bombarded with advertisements for binary options and cryptocurrencies, it is easy to become misled or confused about which securities are legal in your market. Binary options, for example, are illegal in the UK and France but firms such as Binary Mate and Binarycent.com have not only operated in these jurisdictions but falsely claimed to be regulated. Armies of new brokers are selling cryptocurrencies, an asset class that operates in a grey area of regulation.
You can reduce your risk of being scammed by ensuring your FX broker is regulated. Regulated brokers offer investment protection and follow information disclosure rules. If an investor does have a complaint, the broker must comply with claims handling procedures. Finding the best-regulated forex broker for your trading needs is easy. In addition to local regulators, respected investment and forex sites also provide regulated forex broker reviews.
Opt for a Mobile, Intuitive Trading Interface
Traders have more flexibility than ever to customize their stock and forex trading experience. Meeting all these requirements of your ideal forex trading environment may seem daunting. A good forex trading firm will turn this complexity into a seamless, intuitive trading interface.
TradeFW has mastered this balance by providing traders with access to the popular Metatrader platforms and its robust forex trading tools and EAs on a simple web interface. Simplicity does not need to be a compromise. The no commission broker helps traders manage downside risk by providing hedging on all accounts and negative balance protection on 60+ currency pairs and CFDs.
If you cover all our checklist, you should be able to gain more upside in your forex trading. While failing to evaluate any one of these features could cost you money. One more checkmark — ensure the mobile app you require is available, so you can trade forex while on the go.