When you want to get involved in the Forex market, opening an account with a Forex broker will be a necessity. Once you start to get out and look at the Forex brokers that are available, you will see hundreds of options to choose from. While your trading strategy may be sound, you need a quality broker to help you implement it in the market no matter if you are trading in the spot market, futures or forex options. Here are three tips to keep in mind when you find yourself in need of a good broker.
1. Check the Regulatory Agency
Forex brokers are not regulated by a central agency. Since it is a global market, no central agency exists to watch over every single broker. Instead, individual countries or regions regulate the brokers that are located within them. For example, in the United States, the National Futures Association and the Commodity Futures Trading Commission or CFTC regulates Forex brokers.
If you are interested in a particular broker, you can typically go to the regulating agency’s website to find out more information about them. This gives you unbiased information and you can see if anyone has any complaints filed against them. When checking out a broker, you should ask what regulating agency it is a part of. This information may be available on the broker’s website as well.
2. Read Reviews
When choosing a broker, you should also pay attention to what other people think about it. Brokers have hundreds or thousands of customers and many of them are willing to share their opinions online. Many of these sites allow users to rate the broker and to offer comments. Read some of these reviews and find out what the general consensus is.
Keep in mind that even the best Forex brokers will have some unhappy customers from time to time. Regardless of how good a broker is, there will be some negative opinions about it. Take the good with the bad reviews and see what the majority of people think about a broker. Try to keep in mind that no broker is perfect, but you can definitely find some that are better than others.
3. Find a Convenient Broker With Good Spreads
The amount of convenience that the broker provides should also be an important factor for you. For example, you need to find a broker that offers a deposit and withdrawal method that is suitable for your situation. If the broker only offers some obscure third-party payment processor that you do not have an account with, this may not be very convenient. You may want to find a broker that offers credit card and Paypal deposits to go along with the standard bank wire.
The trading tools offered by the broker can also make things convenient for you. For instance, some brokers do not offer the popular Metatrader platform. If you do not want to take the time to learn how to trade on another platform, this may not be very convenient.
Check the foreign exchange spreads of the broker to make sure that they are acceptable. The spread is the difference between the bid and ask price and it can affect your profitability as a trader. Find a broker with competitive spreads that do not fluctuate too greatly.
Authored by Luke Arthur
Luke Arthur is a Forex trader and creator of the site Forex Trading Rookie. If you are a beginner and you need some clarification on software, trading strategies and Forex basics, this is the place for you.