The foreign exchange market is the largest financial market in the world that accounts for a little over $4 billion in average volume of trades daily. If you are new to forex trading, it is indeed difficult to put your finger on who will be the best broker for you, one who will help you maximise your gains from your trading activities. With a huge number of forex brokers today, each of whom claim they can work wonders for you in the currency market, it’s easy to get overwhelmed and confused.
If you are looking for tips on how to choose a good forex broker, you are in luck today for we will outline some easy and basic principles you need to be mindful of while choosing a forex broker. Before you make a choice of a broker or end up trusting someone with your trades completely, you should be thorough with your research. Here are some important things you should ask yourself while choosing your broker:
Check the Registration Details
Any broker of repute in the US will be a registered member of the National Futures Association and will hold the position of a Futures Commission Merchant with the US Commodity Futures Trading Association. If you are looking for one based in the United Kingdom, check whether he has a registration with the Financial Services Authority in the UK. Don’t just go by the looks of a website that may look professional enough and make several claims. If your dealer or agent is not registered with any of the above mentioned organisations, he is not worth his salt.
How Much Leverage Is He Willing To Offer?
Those who are participating in the foreign exchange market, have access to a large variety of leverage amount. Leverage is essentially a loan that is extended by the broker to the margin account of a trader. To illustrate with an example, a broker can offer you a 50:1 leverage. This means if your account size is $1000 your position can be of a value of $50,000. Although leverage can be highly lucrative, it has the potential of destroying a trader completely because the risks too are huge with large leverages.
What Kind Of Trading Platform Does Your Broker Have?
Forex trading can be carried out from anywhere in the world. However, it is your broker’s job to ensure that you have a software platform which apart from looking good is easy to use as well and lets you as a trader enter or exit from trades as you please. A hallmark of a well designed trading platform is a clear “Buy” and “Sell” button, so that there are no accidental trades.
The Customer Service He Offers
Forex trading can be carried out 24×7 as currency markets operate in different time zones. Therefore, a good broker should be able to offer you support round the clock. Another thing to check for is whether there is the ease of getting in touch with a real person if you need to make a quick telephone call. Having to talk to an auto attendant while in process of trading is not only frustrating and time consuming; it may lead you to make financial blunders too.
These are some of the basic things you should keep in mind while choosing a forex broker. Asking questions is never a bad idea, so make sure you ask enough of them before you make a final choice.