October 22, 2021

Forex brokers – how to choose a reliable broker

6 min read
Forex brokers - how to choose a reliable broker

How to choose the best Forex broker? What companies offer quality brokerage services?

Today we move away from strategies, terminals and indicators, let’s talk about choosing a broker to trade.

Who is a Forex broker and what are its functions?

To trade, you must first buy the goods, and then sell. In the case of Forex, the object of purchase/sales favors currency. To purchase it, we turn to the intermediary – broker, executing our trade orders.

Broker – company, buying and selling financial instruments and charging a certain fee.

Can say, that broker – man, who instead of us stands on the exchange and screams: «I sell euro!» or «Buying Yen!», sure, this process is now automated.

Pay, charged by the broker for services, can be of two types: commission or spread. Commission is typical for stock markets: after opening and closing a position, you pay a certain percentage, depending on the volume of the transaction.

The spread takes place in the Forex market, he is paid only once. As soon as we open a deal, the minus sign is displayed immediately – Spread removed from account.

Scalping Strategies, short-term oriented, more convenient to carry out in stock markets, for Forex spreads take 20-50 percent profit, for some instruments (Exotics, USD/RUB and others.) it is impossible to scalp at all.

Long-term deals perfect for Forex – give the broker his spread, and then take huge profits, without paying any commission from them.

How no deposit brokers work?

Yes, there are such companies, where can I trade, without making a deposit, however, nobody just gives money in their hands.

The first option of cooperation with a no deposit broker – receiving a bonus and opening deals on it. You can withdraw earnings only then, when a certain number of transactions.

for instance, Xtrade rewards newcomers with a $ 50 bonus and also teaches trading, after «working off» their money can be withdrawn along with profit.

Second option – do you make any tuition fees, then broker, checking your reliability, gives a lot of money for trading, and you share the profit equally. Example — legally registered Russian company United Traders.

How to choose a Forex broker – 9 main selection criteria

You should never rush to cooperate with a broker, especially, persuade «You will have such an opportunity only today!» — the exchange will not disappear tomorrow, not the day after tomorrow, she will even get better over time.

We have prepared a list of nine criteria, that will help weed out low-quality forex partners.

Criterion 1. Company Duration

The longer the broker works, the more reliable it is, it is definitely. New companies are trying to break into the lead, offering more favorable conditions, but working with them is dangerous: time test failed.

Criterion 2. Suggested Trading Terms

Understanding the conditions is very important, but the trouble is, what newbies, understanding nothing in forex, rush into the pool with his head. To learn how to analyze the conditions, you must first get trained.

First – spread. Than he is less, all the better. Compare different companies and look for the most profitable options.

Second – lot (minimum amount of purchased currency). Here the trader should have a choice: good brokers provide both small lots and large. Larger minimum volume, the higher the risk, hence, the more capital is needed.

Criterion 3. Minimum Deposit Amount

If the minimum is too big, it will not work to start trading with little capital. Yet again, OK, when you have a choice and you can open accounts with different lows. Large brokers usually provide even cent rates, perfect for beginners.

Criterion 4. Order execution speed

Now almost all brokers are equally good on the fourth criterion: transactions are executed almost everywhere instantly. Sure, with huge volumes, serious slippage is possible, but there’s no getting around it.

For reference

Slip – market situation, when a transaction is executed at a price not specified, and the nearest to it due to the lack of a buyer/currency seller at the moment

Criterion 5. Leverage

Leverage will not affect trading in any way, but the bigger it is, the greater the scope of the trader – more about this we will talk in the material «What is Forex? – forex market»

You want to buy a currency of $ 10,000, but if shoulder 1:100, then with a capital of $ 10 you can only open a deal for 1,000, and if shoulder 1:1000 – there is access to 10,000.

Criterion 6. Easy to deposit and withdraw money

Companies, who work under the supervision of European regulators (eg, MaxiMarkets and other similar), require account verification to withdraw money: need to send screenshots of passport and other documents.

In addition to verification, you often have to manually fill out forms, send copies of them – it scares many. Complexities do not always indicate reliability, so, the simpler, all the better.

Criterion 7. Registration difficulty

Any special data (the passport, other documents) at the time of registration, brokers should not request, only phone allowed, email address.

Criterion 8. Customer Support Level

More profitable to work with brokers, who care about their customers: provide training materials, allow you to consult with experts on each transaction. Better support – the more profitable.

Criterion 9. Availability of loyalty programs and bonuses

Competitions and the opportunity to receive bonuses – only plus for the broker. Yet again, compare terms of bonus programs, so that in the future there are no problems with the withdrawal of earned money.

Many dubious companies give traders money first, and then they are ordered «win back». If a trader loses bonus funds before «wagering» — his real deposit is frozen.

As far as we know, there is no similar practice in single companies. According to the terms of the action, which passes now and is regularly repeated, traders get up to 99,9% on your deposit, without risking real means. More details – on the official site.

How to avoid mistakes when choosing a broker — useful tips for novice traders

Many newbies, wanting to make sure the reliability of the brokerage firm, rush to analyze reviews online. They notice, that negative prevails, they get scared and stop working with the company.

This situation happens for a very simple reason. Most traders lose their money on the exchange due to lack of trading experience, therefore, the bulk of reviews from brokers has been and will remain negative.

Be sure to analyze reviews, but you should not pay attention to people’s opinions, but on the quality of service, which brokerage company provides, and level of customer support.

If broker officials respond to every complaint and review, this is a plus. If there are no complaints about a bad interface, glitches, baseless payment delays – another positive point.

In addition to reviews, official legal registration should be noted, office availability – conscientious organizations, usually, localized, if you wish, you can visit their office and talk with management.

If the broker has nano accounts, transfer some dollars there, and then try to take off – define, without delay whether the administration will withdraw your «capital». If you did not take any bonuses, there should be no obstacles.

Company, cheating, never invents grounds for canceling payments, therefore, always take note of all sorts of obstacles in relation to withdrawing a deposit.

Conclusion

The choice of a brokerage company must be approached consciously: intermediaries, wishing to receive a percentage of all transactions you conclude, a lot of, everyone strives to overtake competitors, so the choice will always be.

Must also remember, what is the purpose of man, offering to trade on an exchange – make us register, and the goal of any broker – motivate a beginner to start trading for real money as soon as possible.

Therefore, you cannot blindly trust managers, enticing to the exchange, do not deposit money into your account until, until a steady increase in profits on «demo».