The importance of choosing the right forex broker cannot be harped on enough. If you choose the right forex broker for yourself, you will be able to continue in this arena and win profits over the long run. On the other hand, the wrong kind of forex broker may lead you to give up your efforts in forex trading very soon. This is because the forex broker controls a large number of aspects of forex trading.
There is also a need to look at various forex brokers and decide the one that is right for you depending on your specific needs. Here are the top 7 features of a forex broker and a forex trading account that you need to consider in order to assess one. These features assume that you have done the background checks necessary to ensure that the forex brokers that you have shortlisted are reliable and trustworthy.
1. Types of accounts
The kinds of forex trading accounts that brokers offer vary. There are some that offer mini accounts that allow you to maintain a smaller minimum balance. These accounts also allow you to trade in smaller lots than the standard lots. These mini accounts are essential for those who are starting off in the forex trading arena.
The spread that a forex broker offers is measured in the form of pips. It is the difference between the selling price and buying price of a particular currency pair. The spread is the main form in which forex brokers make their profits, except for when they are a no-dealing desk operation. Therefore, you will need to assess whether the spreads offered by the forex broker are in line with the market or better or not. You should also check whether the spread offered is fixed or variable.
Leverage is the ratio of the capital available to you to trade with and the actual amount that you have in the trading account. Leverage can vary largely between forex brokers and can be 100:1 or as high as 400:1. However, what needs to be understood is that this facility needs to be used with extreme caution.
4. Trade implementation
The speed at which the forex broker executes trades is extremely important in this trading arena which is extremely dynamic. Profit and loss scenarios vary significantly within seconds. You need to know the time that the broker takes to execute your order, whether they offer automatic execution and whether they trade against other clients.
5. Trading platform
The trading platform is the application that you will use most of the times in order to look at past trends, check the trading account and place orders. This is why you need to be comfortable with the trading platform. It needs to be easy to understand and use too. While a large number of forex brokers like fxcm use metatrader 4, most of them customize it to ensure that they provide something unique that the client gets used to.
6. Value added services
A good forex broker will always provide services like forex signals, pre-prepared technical analysis charts, forex news and tips on fundamental analysis too. Try out the system that they have before you open an account with the broker.
Forex trading is open 24 hours a day and therefore you need to ensure that the forex broker that you choose operates at all times of the day. You should be able to reach out for help if you have any kind of trouble even when you are trading in the middle of the night.