Forex trading is one of the fastest-growing markets. According to a report, there are over 14 million active traders as of 2022. Do you also feel like trying out your luck in the forex world? Well, you might not be the only one.
Every day, new traders jump-start their forex trading careers. While many people keep it as a secondary source of income, it is the primary source for others.
The first step to becoming a pro forex trader is to choose the right broker. If you get this step right, you will find the perfect footing. But, how to choose the best one?
Here’s how to choose a forex broker in 2022!
How To Choose A Forex Broker? – 8 Key Factors To Consider
1. Regulations and Trustworthy Track Record
The first and foremost thing to consider is the brokerage company’s track record. If it is new and has no active traders, that’s a clear red flag. There are over 200 regulated forex brokers operating globally. Therefore, it is best to avoid unregulated brokers.
What is a regulated broker? Well, it means that a regulatory body is supervising the brokerage house. These regulatory organizations vary from country to country. Some of these organizations are:
o Financial Market Authority (FMA) for New Zealand.
o Financial Conduct Authority (FCA) for the United Kingdom.
o Australian Securities and Investments Commission (ASIC) for Australia.
Similarly, you can find out whether a brokerage house is being regulated or not. Along with that, you can also see its license for further verification. Click here to get more information about brokers with zar account
2. Commission and Spreads
Now that you know a broker is legit, it’s time to delve into its details. For instance, how much commission it charges on traders.
Generally, commission fees differ with account types. Most brokers offer various accounts with different structures. For example, a standard account will have a lower minimum deposit but a higher commission. That is an important factor to consider when choosing a broker.
Additionally, spreads also play a pivotal role. Spreads are defined as the difference between the selling and buying price. If you want a better deal, go for a broker with lower spreads. Spreads are also dependent on the account type.
Some accounts have fixed spreads. On the other hand, many other types have floating spreads, meaning they change according to the market.
3. Supported Platforms
A trading platform is an application where you execute and manage your entire forex world. There are different platforms, but most brokers opt for MetaTrader 4. Commonly known as MT4, it has become a standard for trading platforms.
That’s because it is suitable for beginners as well as advanced traders. However, the latter version, MetaTrader 5, features even more in-depth tools.
Some brokers also have their own trading platforms. However, choosing a brokerage house that supports multiple platforms is best.
With trading platforms, many tools are also included. These help you get market analysis, insights, view charts, etc. Some popular tools are PsyQuation, AutoChartist, etc.
4. Try Before Investment
Most brokers offer the demo account feature. It is quite helpful for understanding the trading conditions of a brokerage company. The demo account has an expiration date but allows you to trade virtual funds.
Demo accounts are always a plus point. Why? Because you can carefully inspect a broker’s trading environment and services before investing your money. In short, a demo account is like a sample. It allows you to try a brokerage company without giving the initial deposit amount.
Leverage is one of the basic features of most modern brokerage companies. In simple words, leverage means trading with a bigger amount than your actual deposit. Thus, you can also make larger profits using this tool.
However, many jurisdictions restrict leverage as it can be harmful to a new forex trader. Even if you get a broker with leverage, use it wisely.
6. Trading Instruments
Forex is just one of the many trading instruments offered by a broker. The benefit of having multiple trading products is to shift focus where the profit is higher. For instance, you can switch to cryptocurrencies if you spot the right opportunity. But, your broker should be able to support this shift.
Many brokers offer a variety of trading instruments to help traders. These include CFDs, precious metals, stock indices, commodities, gas, and cryptocurrencies.
If you are a new forex trader, you need guidance at every step. You can not turn to books and video tutorials every now and then. To tackle this issue, most brokers offer education material. That comes in handy in developing trading skills and knowledge.
With many brokerage houses, you will find video tutorials uploaded on their platform. On top of that, they also host several webinars with the most renowned forex traders. It helps you get insights into how trading works at every level.
In addition, many brokers also have blog posts, courses, online academies, and e-books with their packages. All of these options help you learn, practice and grow your forex trading career.
8. Customer Support
For new traders, consulting a professional is a MUST. With a new broker, you can get into many troubles. For example, you might have a problem understanding the pricing, trading platform, and account options. Other than that, technical issues can always occur.
What helps with these issues is strong customer support. The broker should have an active team that can quickly resolve your issues. How can you contact the broker? There are several options, including live chat, contact number, email, etc.
Also, your broker should support multiple languages. This way, you can easily solve your issues when connected with the customer support team.
There are some other things to consider, such as margins, execution speed, fund management options, etc. However, they are all secondary. If you focus on these eight factors, you will find the right brokerage company that fits your needs. Make sure to test the brokerage with a demo account before investing the initial deposit.