Step By Step to Finding a Reliable Forex Broker
Step By Step to Finding a Reliable Forex Broker – Are you baffled by the process of choosing a foreign exchange broker? There are dozens of major forex brokers to choose from and it can be very difficult to decide which one you want to work with. A foreign exchange broker will affect every trade you make — and some brokers simply aren’t legitimate. Here are a few things that you can do to find the best provider available.
Discover Your Options: Reviews and Comparisons
How do you find a forex broker? A simple web search will give you a list of some of the larger foreign exchange brokers, but that doesn’t tell you about their quality. You need to look for reviews, comparisons, forum posts, and other third-party information regarding those brokers; don’t just trust the information that is presented on their website. Searching for “forex broker comparisons” or “forex broker reviews” will give you a thorough overview of the different brokerages available and what their benefits and drawbacks are.
Always look at sources with a skeptical eye. Many of the less legitimate foreign exchange brokers will put up fake reviews in an attempt to draw people in. These brokerage firms will hire people to write reviews all over the Internet that appear to be honest. You can usually determine a fake review in a few ways: they will all be fairly similar, the reviewers will have only posted one review on the site, and they won’t mention anything negative about the site at all. By the same token, remember that unhappy or inexperienced traders can write bad reviews just because they themselves had a negative trading experience. Bad reviews in and of themselves don’t necessarily indicate a bad broker.
What to Look for In a Broker
Nearly every reputable forex broker out there will let you open an account to test and practice on. This lets you see whether that broker is the right one for you. Here are a few things that you should be looking for:
- Pairs. Most brokers will carry all major currency pairs. However there are strategies that bank on trading less common currency pairs. If so, you need a broker that supports them. Only some brokers support more exotic pairings.
- Spreads. The lower the spread you can get, the better. Spreads are essentially the fees that you’re going to need to pay on a per transaction basis; it’s an amount added on to the current trading value of the currency.
- Leverage. Leverage is the amount of power your money has. A 10:1 leverage means that each dollar is worth ten. You don’t necessarily need the highest leverage: high leverage accounts can even be dangerous for a new investor. Nevertheless, it’s something to think about — having that leverage available is extremely useful.
- Deposits. How much money do you need to get started? Different brokers will have different minimum deposit requirements, so you need to make sure that the broker you’re selecting will let you open an account.
- Latency. The forex market moves incredibly fast. Is your broker able to keep up? Test a brokerage with a practice account to see how quickly trading is actually initiated. For certain strategies this can be extremely important.
- Technology. Your broker should support multiple platforms for trading. Many of the leading brokerage firms have apps in addition to web-based platforms. You’ll have to access your brokerage from a variety of locations, so having a reliable forex broker portal is essential.
- Support. How can you contact support? When is support available? Ideally you should have 24/7 support available and should be able to contact them directly via phone, email, or instant chat. Additionally, thorough documentation should be available, for everyone from beginners to more advanced traders.
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Avoiding Bad Brokerages: Signs to Look For
Some brokerages are just bad. They’re designed to drain money from you from every trade, which can ultimately sabotage even the most successful of strategies. These brokerages could also potentially disappear entirely. Other brokerages are just scams entirely: they will take your money and likely send it to an offshore account where it’s never to be seen again. Here are a few things you should look out for:
- New brokers. New brokers aren’t necessarily scams but they have less activity to judge them upon. A really good broker should have at least a couple of years of experience within the industry. It’s better for those new to forex to stay with more established brokers.
- Scam reports. Search for the name of the broker plus the word “scam.” If you see a lot of scam reports, you may be dealing with a bad broker. Do remain skeptical though, because some reputable brokers can have their reputation damaged by competitors.
- Hidden fees. If you’re going through a sign up process and you see the fees accruing, you know that the broker is simply trying to get additional money from you. This isn’t going to stop; you’ll be seeing more fees down the line.
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- Urgent deals. Is the brokerage offering you more leverage if you sign up in the next 24 hours? Is everything on their site geared towards getting you to sign up immediately? Brokers only use these tactics if they are trying to hook you before you’ve done your research: for instance, sending you a pop up ad once you leave their site. Good brokers simply don’t need to resort to these tactics because they get their customers through word of mouth.
- Bad support. If customer support is slow to respond or rude to you, you already know that you aren’t valued as a trader. If you run into serious issues down the line, it’s likely that you won’t have anywhere to turn. It’s better to go with a better supported broker even if fees are slightly more expensive. Try to contact support when signing up for an account to test out how well they support you.
Finding the right broker is absolutely essential to your success as a trader. Your broker will have an impact on every trade you open and close, and will be able to contribute to your financial gains through technology, support, and low overhead. The good news is that there are many reputable and responsible brokerages available, you just need to find the right one for you. Remember that in all things, if it’s too good to be true, it usually is. Brokerage scams tend to bring in new investors by offering “too good to be true” promotions and deals. In trading, it’s good to be greedy — but only to a certain extent. Do your research and you should be able to protect yourself on this vital first step towards a profitable trading venture.