The choice of forex broker for new traders can be daunting given the excess of brokers available, all promising high returns on investment. It is advisable to ignore the hype and critically analyze your forex trading needs first, then set to look for a forex broker who meets them to your satisfaction.
Forex traders offer a variety of features to help you trade on their platform and make the most of your money and time investment. A good forex broker ensures they meet their client’s needs by offering a platform with reliable trading features. In this article, we discuss these must-have features of a good forex broker.
You must ensure you get the best service and products from your broker and that your investment is in safe hands. Consider a broker registered with either the Financial Conduct Authority (FCA), Financial Services Authority, Commodity Futures Trading (CFTC), National Futures Association (NFA), or any other body or agency.
A regulating body ensures that a forex broker provides information on their business operations, how they intend to protect the funds remitted to them by investors, and their requisite training on handling the client’s investments. A duly regulated forex broker will fully disclose their trading terms, show their registration details, and demonstrate compliance with trading laws and regulations.
Investment Leverage Provision
Forex traders offer different types of leverage for your investment. Your choice of broker will determine the amount of money you can trade at a time. In essence, the investment leverage your broker provides for you impacts your ability to make profits in the forex market and the cost you incur on your trading account.
A forex broker with a provision for clients with high investment leverage allows you to trade more money in a single position and gives you better prices for the trade. However, high investment leverage also bears a higher risk than low leverage.
Contract Size Offerings
The contract size is the amount of currency you can trade with your forex broker at a given time. If your broker offers you more contracts per unit, you get a higher volume to change, allowing you to grow your investment without selling every asset in your portfolio when trading.
Different brokers offer either of the following types of contract sizes:
- Standard contract sizes: These contracts are for new retail traders in trading forex.
- Large contract sizes: These contract options are for experienced traders who can trade large amounts of currency on a single account.
- Micro (Mini) Bots: These small accounts allow you access to smaller amounts of currency than standard contract sizes and have fewer trading restrictions than large contracts.
Spreads and Commissions
The difference between a broker’s rate and a buyer’s rate in the price of a particular currency pair is known as a spread. On the other hand, commissions are the fees your broker charges you to cover the costs of handling the trades on your behalf.
When choosing a forex broker, consider the spreads they offer on trading and commission charges, as these vary per broker. Commission fees vary depending on the different types of trade or contracts your broker offers.
Deposits and Withdrawals
Trading in forex means you will be required to make deposits to fund your account and frequently withdraw the profits you earn. A good forex broker should allow easy depositing and withdrawing funds when needed.
Consider what deposit options your broker allows, whether by credit/debit card, PayPal, cheque, or bank transfers. Check if there are charges for opening an account with the forex broker and any expenses you may incur when moving funds to your forex account.
Before signing up with your broker, consider how fast you can withdraw your money from the trading account. Are there any fees associated with withdrawals from your account? Are there time or amount restrictions? Also, consider any charges you may incur if you make multiple transactions in a day or a given time frame.
Platform’s Ease of Use
Another critical consideration to make before settling on a particular forex broker is the type of trading platform they offer and how easy to use it is for you as a trader. You can choose between downloadable or non-downloadable trading platforms, dealing desk trading platforms like MetaTrader4 or MetaTrader5, or direct market access platforms, also known as ECN platforms.
A forex broker should offer a user-friendly interface and easy-to-use trading platform options. A good forex broker should also provide round-the-clock and knowledgeable customer support and should also provide you with ongoing support and forex trading training.
Other than entering and exiting a trade and everything in between, choosing a forex broker who offers investment security features is crucial. Go for a broker that offers your account two-factor authentication (2FA), ID verification, and one-time password (OTP) features. These work to prevent unauthorized access to your account and investment.