What to Consider When Selecting a Broker?
There are so many brokers out there that it can be a minefield deciding which one to trade with. Yet this is an extremely important decision and can impact on your trading and your ability to turn a profit.
Here I have compiled a list of important points to keep in mind when choosing your broker.
This is quite possibly the most important point. Always trade with a regulated broker. There are so many scams on the internet that it is all too easy to be sucked into one. Check on the relevant regulators’ website whether the broker you are looking at is regulated. If it is not, then just walk away. No matter how good the deal is that they are offering you will probably end up worse off.
A regulated broker should also have their funds segregated as a form of client protection. This means that should anything go wrong, for example the broker go under, then your funds will be segregated and therefore protected. Again, be sure to check this out with the broker.
Spreads are one of the costs in trading, so it is important to make sure you go to a broker with low spreads. However, don’t fall for any gimmicky marketing, spreads need to be all the time you are interested in trading, not just for an hour day! Look towards ECN brokers, using the ECN feeds they get their prices direct from big banks and liquidity providers. Around 70 institutions feed into the ECN pricing feed meaning the best price and tightest spread is guaranteed.
Whilst whether you like a platform or not can often be fairly subjective, however there are a few things to consider. Is it easy to navigate? Are the charts useful? Does it look professional? Does it crash often? This is extremely important, the last thing that you want is to be trading and the platform crashes. You are putting your money into this broker so you need to be comfortable with the tools that they give you. This platform is what will enable you to put your trading plan into practice and you want this to be the case in as few steps as possible.
The forex industry is infamous for its poor customer services. Have you tried to call the broker in question? Were you able to get through quickly? Have you tried emailing them? Did they respond with in an acceptable timeframe? Do you feel you have been dealing with representatives that were helpful and informed? If you were less than impressed by the responses that you received think twice before putting your money with this broker.
Nowadays almost all brokers offer the possibility of using stop losses. However, there are a few out there still which don’t. Just double check that this is a tool they provide you with as without risk management your account will almost certainly fail.