There are a large number of brokers on the market with a wide variety of offers. When a customer starts looking for a broker, he or she is likely to be completely sheltered from the situation and to have an enormous amount of information at their disposal. Here’s how to choose a forex broker!
How do clients choose a Forex broker?
There are a large number of brokers on the market with a wide variety of offers. When customers start looking for a broker, they are likely to be completely sheltered from the situation and have a huge amount of information at their disposal.
Therefore, clients should ask themselves whether choosing a forex broker is such an important decision, so it is worth studying and analyzing so much information. The answer is yes. The broker is their partner in the trading activity, it is the link that can very easily make the difference between being a successful trader or staying with a bitter taste and giving up this activity.
What is a Forex broker?
A Forex broker is the financial intermediary with whom clients will open a trading account to place orders in the foreign exchange market. A reliable Forex broker is a regulated entity because to be active in this field, it must be licensed and be under the supervision of the relevant financial authorities.
How clients choose a Forex broker for their needs
If a client is a beginner and does not have a lot of knowledge about the financial markets, it is advisable to take a Forex trading course in order to get a general idea of how it works and how he can benefit from this activity.
He should also choose a trading style, depending on how much time he can devote to the financial market and trading. For example, if a client can sit down and study the charts daily and choose scalping, he should make sure that the broker he has chosen allows scalping.
In choosing the right broker, clients can take into account several aspects:
The broker needs to be regulated. It is very important that the broker is licensed and is on the list of approved providers by the Autorité des Marchés Financiers to avoid any surprise that the broker disappears with the client’s money or that clients can no longer withdraw their money from the trading account.
Security of deposited funds. Clients should verify that the broker they are considering has segregated accounts (i.e. the broker’s accounts as a business entity are separate from the clients’ accounts – thus, in case of financial problems, the clients’ accounts are not affected) and opened in a prestigious banking institution.
The trading platform provided by the broker. Clients must have a reliable and robust platform at their disposal. MetaTrader is the most widely used platform by brokers worldwide.
Spreads and trading commissions. The spread of the targeted trading instruments, commissions, swap and quality of execution should be checked. It is a mix and clients must have competitive costs at their disposal. Of course, choosing the lowest spread is tempting, but one must keep in mind that the average spread is not always guaranteed when one has market orders.
Re-quotes and quality of order execution. It is important for the broker to place orders in the market at the price level you target and not to re-list your positions at other price levels.
The strategies that the Forex broker allows. Clients should choose a broker that does not limit their choice of trading style. For example, if they are interested in scalping, they will not have a minimum number of pips between the current price and the stop-loss, or between the current price and the profit.
The execution model you need. Traders have to choose between a Forex broker with dealing desk or without dealing desk. They can choose an ECN, No Dealing Desk or STP broker depending on the desired strategy.
Variants of account types for trading – The broker should provide its clients with the account types they need or want: ECN, STP, or offer them discounts or bonuses for large deposits.
Number of markets offered. It is desirable to have access to as many markets as possible in order to choose and identify as many trading opportunities as possible. Check whether the broker you are considering has access to stock indices, commodities, equities, crypto-currencies, ETFs, bonds etc.
Possibility to adjust the leverage. Forex is most often traded with leverage, which can be a considerable advantage, but also a major disadvantage when the market moves against you. This is why it is important to adjust the level of leverage according to your needs.
Courses, study resources, webinars, seminars. It is very important, especially if you are a beginner, that your broker provides access to appropriate training. First of all, clients must have a solid theoretical background and study specialized jargon, the most commonly used indicators, the types of successful trading strategies, etc. In addition, having access to periodic webinars with market analysis or seminars where successful traders expose their trading methods and strategies can be useful to improve trading performance.
Customer service in English. If customers need assistance or encounter a problem, it is best to answer in their native language, even if they are multilingual.
We advise all customers to make a list of the criteria that are important to them, in order of importance, and to select the brokers they target. They should choose three of them and open a demo account with each one. This way they can test trading on the instruments they are interested in using the desired trading style. Afterwards, clients can choose the broker they find most convenient.
As their trading knowledge improves and their strategies become more sophisticated, clients’ needs will also change. Thus, to this list of basic criteria will be added new criteria, in line with the new level of performance.
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