Many online brokers are looking to win the traders’ businesses in forex trading. Brokers are those persons who hold your money in an account to earn profit from nightly changes in the currency pairs. In turn, they get the commission from you.
But not all brokers are honest; some are scammers also. So, before choosing the broker, you first figure out what type of investor you are and what your goal is. Then choose your broker according to it.
Each broker that features the forex investment has some pros and cons. The most distinguishing factor to consider is the regulation, security features by the company, transaction fee, and many others. Security features vary from broker to broker. Some offer integrated security, such as two-step verification to secure the account from third-party involvement.
Brokers also differ in their platform and transaction fees. There are many factors to explore while choosing the right broker or platform. In this article, we will discuss all those factors. Let’s jump into the details:
Factors For Selecting a Forex Broker
When selecting a reliable broker, take time and research thoroughly to put your investment in safe hands. Moreover, a variety of factors to consider before choosing a forex broker. Some of these factors are described as:
Regulatory Compliance
First, the thing you have to consider when picking up a forex broker is their reputation. In the US, a reputable broker is a member of the NFA (National Futures Association. It is a self-moving organization that works for the futures industry.
Moreover, the broker will be registered in the CFTC (Commodity FuturesTrading Commission), which synchronizes market options. The novice should avoid those brokers who don’t provide their NFA or CFTC number as they may be scammers.
Typically, the brokers provide their CFTC and NFA numbers in their website’s “About Us” section. However, each country has its own regulatory rules; if you want to protect your deposits, open accounts with those duly regulated brokers.
Deposit and Withdrawal Policy
The most important thing to consider is your broker’s deposit and withdrawal method. Each broker has its specific account funding and withdrawal policies. These methods to fund accounts online include via ACH payment, PayPal, bank check, wire transfer, debit card, business checks, personal checks, and others. The common withdrawal methods are wire and check transfers.
Account Features
Each forex broker offers a different account. Consider the four different points while selecting the brokers. These areas include
- Initial deposit requirements
- Commission and spread
- Ease of deposit and withdrawals
- Leverage and margins
These points will assist you in picking up the right broker for you. But it is customary that you need to do a lot of research to avoid scammers.
Currency Pairs
There are a variety of currency pairs in the foreign exchange market. But few of them gained the top-notch. The major currency pairs of the forex include USD/JPY and USD/CHF, which offer trade with high liquidity.
A broker offers an abundance of currency pairs, but you have to consider whether it contains the currency pair of your interest. For this purpose, thoroughly research the currency pairs.
Customer Service
As foreign exchange trading occurs 24 hours a day, figure out that your broker must be available at any time. Also, check whether it is easy to chat with brokers. You can call a broker to check the customer service they offer. You can also judge the average wait time.
Margin Call and Leverage
With the assistance of brokers, forex traders can access the leverage made on their margin accounts. For instance, with the leverage of a 1:100 ratio, traders can trade 100 percent higher in volume than their account size.
Some brokers offer the leverage of a 1:200 ratio. Trading with such higher leverage can be profitable. But there is a chance of potential loss of your investment as well. So, choose brokers with normal leverage and experience in forex.
Final Verdicts
When looking for a reliable broker, take enough time and do a lot of investigation, as wrong decisions can be costly. The elite brokers offer solid resources, low trading capital, and access to the interbank system. A bit of research goes a mile and enhances your chances of success in the foreign exchange market. If you have residence in South Africa, and figuring out an authentic broker, visit Forex Trading South Africa.
