How To Choose Forex Broker

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Becoming successful in forex trading requires a trustworthy forex broker. So, how do you take that first step in finding the right broker for you and your trading style?

Here’s our top tips

  • You can’t just close your eyes and pick a name! There are quite a few things to consider so first do your research.
  • Is the broker licensed/registered? This does, of course, vary from country to country, but some light internet research should be enough for you to figure out what certifications and regulations your forex broker needs to comply with in your specific region. If a broker isn’t regulated by a reputable financial authority, you should consider a different one.
  • How do they operate? While this can be more important for forex trading for quick profits on limited pips, it’s a good question for any trading strategy. Does the forex broker use a non-dealing or a dealing desk? Are spreads fixed or not?
  • What leverage ratio is being offered? Each forex broker will have different margin requirements, which may affect your strategy. While this may be too in-depth for this article, you need to be certain that the leverage offered is suitable for your forex trading style. Less is more if you’re in doubt.
  • What risk capital is needed? Hopefully you are starting with a demo account, but knowing this going in is critical. Micro lots are always a good choice for newbies unless you have over $2,000 to put on the table.
  • Are you thinking of holding positions overnight? Then, you need to find out how the forex broker handles swaps/overnight interest.
  • Does your broker of choice offer any other services that you may require such as education resources, or trading signals?
Now we know what to look for, and the information we need to get started. What should we do next?

How do I pick a good forex broker?

Reach out to brokers at this point and find out if they fit the forex trading strategy you need. Get yourself a shortlist of the ones who tick all the right boxes for what you need.

Keep in mind that you can open a demo account to familiarize yourself with a broker’s platform before investing real money. Don’t focus on one broker just yet. Rather open two or even three demo accounts with the ‘most likely suspects’ from your list. This allows you to experience each Forex trading platform for yourself, and get to learn the ins-and-outs of each. Remember that there will be slight differences between ‘live’ and demo account, but not so much that you can’t get a good idea if this is the trading platform and the forex broker for you. Reach out to their customer service at this stage too, as having reliable and friendly customer support on your side is critical.

As you sort through this testing stage, you will start to appreciate which platform and broker is the right one for you. You’ll also get a good sense of how each brokerage reacts, and whether this is the right forex broker for your investment goals.