This is an overview of the most important criteria when choosing a Forex broker.
Safety and Reliability
The most important points in choosing a broker are security, safety and reliability of the Forex broker. The best FX broker and the highest bonus make nothing if you cannot cash out your winnings.
How to determine if a FX broker has high levels of security and integrity? Check out these main criteria:
- Since when is the Forex broker active on the market? Is it for five years or longer active in the market or has the company just been established recently?
- Is the FX broker controlled by the regulatory authority of its country? Secure Forex trading providers mention this on their website (usually in the “about us” section)
- Is it easy to withdraw money from the Forex account? Deposits can be done quickly with all Forex brokers, and also with various deposit methods. Withdrawing money is usually a bit more difficult. At least with some brokers problems with withdrawing funds have been reported. It is best to have a look at the results in a search engine by searching for these keywords, combined with the number for the current year
Transaction Costs – Low Spreads
A second important issue is transaction costs. When trading currencies with a Forex broker, you do not have to pay any commissions. However, the broker earns money by applying a spread: the company sells you a currency pair for a higher price than it buys the currency pair from you. This means you buy foreign currencies at a higher rate than you can sell them. This is called the “spread”, the difference between the bid and ask price. Low spreads mean higher profits for you. Check and compare the spreads of various brokers for the currency pairs you want to trade. Reputable FX brokers have relatively low spreads: they want to earn money by attracting more customers instead of ripping of their traders with too high spreads.
The execution of Forex orders is important. If you click the “buy” button, you should be able to get the currency pair at the specified price. An exception can be when the market is very volatile. But otherwise, you should get the specified price for the currency pair when you buy or sell foreign currencies. If there is a long delay in the execution or if you regularly get a disadvantageous exchange rate (high when buying, low when selling), it is time to find a new Forex broker.
Software / FX Trading Platform
You must feel comfortable with the trading platform of your FX broker. Many FX brokers have developed their own software. Take a closer at the software of your broker by trading first with a demo account before depositing real money. Alternatively, you can choose a broker that supports Metatrader (MT4 or MT5). In this case, you are not limited to the trading platform of your broker.
Customer Service and Support
Also customer service is important – at least if you are a trader who frequently contacts the customer service department of a Forex broker. It is important that the customer service is available 24 hours a day during at least five to six days per week. Some FX brokers have a toll free number, or offer a free callback through a call center agent. An excellent option that some brokers offer is the “live chat” feature, where you can chat with a customer service employee if you need a short, quick answer. If you do not speak English fluently, you should also choose a broker that offers support in your first language.
Free Demo Account
Before you trade for real money with a new FX new broker, you should familiarize yourself with the software for a long time period with a free demo account. With a Forex demo account for example you receive $ 50,000 as “play money”, which you can use to trade under real conditions. Almost all FX brokers offer a demo account. Unfortunately, many of them offer only time-limited demo accounts, for example for 3 weeks. This is a short period of time, especially if you don’t have the time to trade foreign currencies daily. Consult our list with brokers which offer unlimited demo accounts.