Choosing the right forex broker is not only a common challenge for beginner traders, but even the more experienced market players, which after working for some time with one broker have their reasons to venture out in search of a different brokerage firm.
It must be said, that in many cases (especially for traders outside of the US) this broker search entails the choice of a Dealing Desk rather than a true forex broker, being only an intermediary between traders and ECN brokers.
Even so, a good trader is always on the lookout for a good company, which would be accountable, satisfy certain expectations, and have relatively comfortable conditions for online trading. And here, is where we highly recommend conducting a very detailed analysis – double check that your forex broker of choice is reliable!
Of course, reliability has a different meaning for each individual. Some find confidence in knowing the scale of the company: average turnover, capitalization, income indexes, etc. Such data can often be closed to the end customer. However, a company that values its reputation and desires to create a sense of transparency, would often make information related to its financial performance public voluntarily.
It is also very important to make sure that the company trusted by your investment and financial operations is regulated. Spend some time to investigate, where and how the forex broker is regulated, and which trading instruments is it licensed for. This is information is freely distributed by almost any broker, and most of them are regulated at least in some way.
A broker’s reputation is another defining factor. For how many years does this company operate? Who are the investors and management? Perhaps, there articles or other publicity related to this company on the Internet? Google it! Trader forums, such as Forex Factory, can give a lot of sincere feedback for most of the brokers out there – such customer testimonials would be the most accurate.
There is a wide variety of websites, dedicated to trading, which specialize in posting reviews and ratings for different brokers and allow readers to evaluate and comment articles. While not in all cases 100% accurate, this information can also be very useful. Don’t be too quick to judge though – sometimes a happy client doesn’t feel the urge to post any comments and continues to trade silently, while a sizeable vocal minority may shape negative ratings for any firm.
Trading conditions and policies are another very important feature of any forex broker. Here are some of the things that you should take note of: order execution speeds, minimum deposit size, leverage options, minimum lot size, spreads. Take some time to test drive the broker at least on a demo account to see how those things play out for you when applied to your trading style. Also, stay in touch with the trading community, and see what sort of feedback they have to offer.
A question of paramount importance is the broker’s policy towards withdrawals. Typically, most brokerages offer at least several withdrawal and funding options, such as bank wire, credit card, checks, e-payments, internal account transfers, even hard cash at the head office for some cases J. As for the withdrawal algorithm itself, most traders like to test this personally with a live account. Simply fund an account with the lowest sum that you can afford, and request a withdrawal after some time. Note how long this will take, and if any unscrupulous conditions are imposed on you.
The main purpose of a forex broker is to provide necessary trading software, and to execute orders in a timely and diligent manner. However, for a full and comfortable trading experience most of us want more than that – make sure to check if the broker offers any additional services, such as training, VPS, fundamental analysis, trading support, etc.
And last, but not least, take note of where the broker is located. Virtual companies with nonexistent offices are a thing of this century, and while many of them are legit businesses, unfortunately they can disappear just as quick as they have materialized on the market.
Choose wisely, and good luck!