How To Select A Forex Broker

Forex brokers let you trade with ease in the complex forex markets. Are you looking to trade, but unsure how to select a forex broker? Here are some crucial things to look out for.

Selecting a forex broker isn’t easy. When doing this, you need to be aware of many things:

  • Security and Regulation
  • Trading products
  • Instruments for Trading
  • Trading platforms

Apart from checking these, keep in mind the forex market is uber-competitive. And high competition can offer both advantages and disadvantages. On one hand, you have got brokers lowering their prices to nearly zero just to fetch more customers. On the other hand, not all these forex brokers are trustworthy.

So, is there a way to choose a good broker? We’ll answer that in this article.

There’s no “Perfect Broker.”

Right off the bat, there’s no such thing as a “perfect broker.”

There’s always something. For example, a broker might offer you cheap services. But the same broker has a not-so-good reputation among traders. Maybe it’s not regulated. Or maybe it doesn’t have sufficient fund protection policies. Maybe it’s a scam.

On the other hand, you might find a broker that’s regulated, trusted, and highly popular among traders. Its platforms and trading instruments are excellent. Additionally, customer service is super accommodating and friendly. It has everything you need. But the prices will drain your pockets. Maybe the transaction costs are high. Maybe the trading instruments aren’t cheap.

So, when choosing a forex broker, remember to keep a balance between reasonable prices and excellent services.

Importance of Regulation

Now, you might be looking at hundreds of forex brokers at the moment, and you just can’t choose which one’s right.

To help you narrow down your choices, check their regulatory status. This step is the first and most crucial step you need to take. Regulated brokers typically offer the best policies and security clauses for traders.

But you should not go for just any regulator. There are top tier regulators, and then there are those that just don’t cut.

So, when choosing a forex broker, remember to keep a balance between reasonable prices and excellent services.

Top Forex Regulators Around the World

In the United States:

  • National Futures Association (NFA)
  • Commodity Futures Trading Commission

In the United Kingdom:

  • Financial Conduct Authority (FCA)
  • Prudential Regulation Authority (PRA)

In Australia:

  • Australian Securities and Investment Commission (ASIC)

In Switzerland:

  • Swiss Federal Banking Commission (SFBC)

In Germany:

  • Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)

In France:

  • Autorité des Marchés Financiers (AMF)

In Canada:

  • Investment Information Regulatory Organization of Canada (IIROC)

Trading Products

When we say trading products, we mean every asset the broker offers. And since we’re talking about forex brokers, they should provide forex products. Essential forex products include all the major and minor pairs.

If you’re not familiar with the majors yet, here they are:

  • EURUSD
  • USDJPY
  • GBPUSD
  • AUDUSD
  • USDCHF
  • NZDUSD
  • USDCAD

These are the essential pairs you may trade. They get the most significant trading volume in the market, as well as the broadest news coverage. So, it’s easy to buy them and search for information.

 

 

 

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