Five Things to Consider When Choosing a Forex Broker

The foreign exchange is set up in such a way that there is no central marketplace; instead, investors must choose a broker to provide them with access to it. The broker you decide on can have a major impact on your overall success, and with a large number to choose from, it’s important that you whittle them down to find the right one for you.   

Here are a few things to consider…

Leverage and Margin

Leverage is a loan extended to investors by their brokers. The account offerings provided by each broker will vary, and different brokers will offer different leverage amounts, such as 10:1 or 200:1. If you chose a broker offering the latter figure, this would mean that by investing just $2,000, you could hold a position valued at $400,000. The higher the leverage the more likely you are to earn significant profits. However, higher leverages also carry the risk of greater losses. Thus, it’s worthwhile to consider the amount of risk you’re willing to take, and to find a broker whose leverage offerings complement this.

Commissions and Spreads

Depending on your attitude to risk and your overall trading strategy, fixed spreads, variable spreads, and commissions will suit you to varying degrees. If you’re risk averse, you may find it best to avoid those brokers offering variable spreads when you’re conducting your search. If you’re willing to run the risk of greater profits and losses, however, those offering the latter option may turn out to be the ideal fit. Know exactly what you want before making any final decisions.  

Currency Pairs

Forex brokers may offer an almost infinite selection of forex pairs, but unless they offer the type that you’re interested in then they’re to be avoided. Before choosing a broker, make sure that you sit down and work out what you want to trade. This will allow you to make your final decision on the basis of selecting the enterprise most likely to help you achieve your investment goals.   

Customer Service

Forex can be traded 24 hours a day, so it’s important to find a brokering service that will have someone on hand to help and support you at all hours of the day and night. With so many different brokers available to you, there’s no need to settle for someone who fails to meet even your most exacting demands. Consider, too, whether your preferred broker will have a live person available if you should need to reach them, to cut out the stress of dealing with auto services. You should be able to get a good idea of this through your initial enquiries to them.   

Trading Platform

A bad trading platform can make all the difference between profiting and making a loss, so it’s important that you find a good one. The platform you choose will be your portal to the forex marketplace, so it needs to be easy to use, simple to interpret, aesthetically pleasing, and come with all of the tools that you’ll need for your analysis. Many traders will be able to show you a demo version before you agree to anything, so that you can get a good idea of what it feels like to use it; after all, the potential for costly mistakes in forex is too high to take any chances with a badly designed interface.    

Bear all of these things in mind in your search for a forex broker and you’ll find one that’s perfect for you.