Tips for aspiring traders. How can I choose a broker on Forex?
To make profitable deals in the foreign currency market each aspiring trader must choose a reliable intermediary- a broker. Nowadays on Forex there are hundreds of brokers, each one declaring that he or she offers the best terms and conditions. But how can you avoid making a mistake in choosing the most reliable broker?
Below we present 5 of the most important criteria which will help you to make the right choice.
1. Reliability and security
The most important criterion when choosing a broker is the security of your money. You must be 100 percent sure that the money you have put on your account will remain safe and secure.
To check the safety of your chosen broker, read in advance any reviews on him/her on specialised forums and websites. Pay special attention to:
- his/her possession of a licence (in the USA- a CFTC licence, and in the UK- FSA. Unfortunately, in Russia there are no such organs controlling working in the foreign currency market as of yet);
- work period (the longer, the better);
- the possibility to resolve conflicts via legal channels (this point should be displayed in the service delivery agreement);
- the possibility for risk insurance in case the brokerage firm collapses.
2. The down payment amount
The second thing worth paying attention to when choosing a broker- the amount of the down payment, essential for opening a trading account. The majority of novices prefer not to risk large sums of money and therefore search for a broker who requires a low deposit amount. However, such an approach is justified only if you possess a small amount of money.
In any case, choose a broker based upon the amount of money you would not regret losing in case of failure, since Forex is quite an unpredictable and unstable market, after all.
The third important criterion for choosing a broker- the size of his/her spread. At the onset trading conditions everywhere appear to be the same, but in actual fact they differ hugely from one another. The wider the spread, the larger the amount you will pay the broker for making a deal, irrespective of whether profit or loss is incurred. Therefore you should choose a broker who offers the most competitive spreads on the market.
4. Adding and withdrawing funds
Earning money on Forex will be difficult if each time you add and withdraw money comes with difficulties and high fees. Remember that a broker cannot prevent funds being withdrawn from your account, since he/she is simply a guardian of your money. Choose a broker who does not delay and does not refuse to allow traders to withdraw their funds. To ensure this, fully acquaint yourself with a broker’s reviews before trusting a broker with large sums of money.
Good brokers always offer traders various possibilities for adding or withdrawing funds. For example the FXOpen broker just recently added another payment system- ePayments– to their extensive list. Using this service you can add funds to your trading account instantly and with fees of just 1%. Withdrawing funds to an ePayments account takes just 1 hour with no fees!
5. Support team
Any piece of software sometimes produces errors. If problems appear with your software or other questions arise you will be required to contact the support team. Therefore it is important that the people working there are friendly, well-trained and able specialists who are willing to help their clients increase their profits and resolve issues which initially arise. Before adding funds to your account, we advise you to contact the technical support team via any method, whether by an online chat service or telephone.
Unfortunately not all foreign brokers have a Russian-language support team. Therefore, if your level of English is not as high as you may wish, choose a Russian broker. Only then will you be able to resolve any questions you may have during the trading process and become a successful trader.
In any case, we wish you good luck in choosing a reliable broker, and success in trading on Forex!