Lesson 9: Eight factors to consider when choosing a forex broker

There are hundreds if not thousands of forex brokers that you can choose from. All compete for both experienced and amateur traders. Remember that the number of people who lose their income through forex trading is larger than the number of those who gain. You need to be smart from the beginning, from the time you choose your forex trading platform. So these are the key things you need to consider when choosing a forex broker.

  1. Most fundamentally, SECURITY

You most probably do not wish to lose more than you can afford to.

Remember when I said that in every market there is a group of mad people? Did I really say that? I think I said there is at least one bad apple in the market of apples. Be attentive in my forex trading class please.

There is this group of bad apples in forex trading. This pathetic lot of scammers who want to reap where they did not sow. Supposed traders who want you to provide them with your personal details so that they can hack to poverty.

To avoid such fraudsters, consider forex brokers who are legitimately governed by a credible regulatory agency such as the National Futures Association (NFA) in the U.S., Financial Conduct Authority (FCA) in the UK, and the Capital Markets Authority (CMA) in Kenya.

  1. Check your pockets and wallets, if you have any. 

Do they afford the TRANSACTION COSTS?

Anyways, no forex trader is in the business to lose money. Look for affordable brokers out there. One that can accept the amount of deposits that you can afford, and one that offers the best prices in terms of bid and ask. But remember cheap is expensive. Ensure that your forex broker is legit before even considering their transaction costs.

  1. Ease of DEPOSITING and WITHDRAWING funds.

After narrowing down to a few credible and low-cost forex brokers, identify the ones that allows you to deposit and withdraw money easily and conveniently. Brokers are supposed to facilitate easy transaction, not to complicate your life.

Thus, choose a firm that offers a smooth and speedy process of depositing and withdrawing money. They should be offering a wide range of online payment methods so that you can choose the one that is convenient for you.

  1. Consider the forex traders TRADING TOOLS.

The forex trading platform offered by your broker needs to be easy and simple for you to use. It should provide a good user experience so that you can sign in and execute forex trades easily as many times as possible.

  1. Availability of INFORMATION and ANALYTIC TOOLS.

As a forex trader you will understand that you need to analyze the market (fundamentally) and each trading option (technically) to make the right decision in forex trading. Check your broker to see whether they offer sufficient analytic tools and market information to help you in your analysis.

Do they have news about major markets? How frequent are the news provided? How reliable is the information they offer?

  1. Prices Offered by the forex broker

Forex brokers will offer prices based on market conditions. When you execute a forex trade, your broker must not fill you too far off from the market price. Consider whether you want a flexible spread where your trading position is predictable, or a variable spread in which you are assured of transparency from the broker.

  1. Customer Relationship

You should also choose a forex broker that offers a good customer service. Are they responsive to requests? How quickly do they respond to customer requests? How effective are they in their responses? Do they communicate effectively with customers?

And finally…

  1. Open demo accounts on AT LEAST two online forex trading accounts

Demo accounts offer you virtual money to trade with. ALL legit forex brokers give the opportunity to train with a demo account before using real money to gamble…sorry, to trade. By opening a demo account with more than three accounts, you will know which one is more convenient for you in terms of all of the above key factors.

But remember…

Please demo-trade in the forex market for AT LEAST three months before committing your hard-earned money on forex trading.

Lesson 10: The 10 Common Mistakes that Most Forex Traders Make

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