Choosing a forex broker plays a vital role in success trading on the foreign exchange market due to the size of commissions, the trading instruments available, the speed of trade execution, and many other parameters. At the same time, choosing among thousands of brokerage companies is sometimes difficult. We have prepared a guide to help you navigate the variety of forex services.
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Three Tips
- Make your choice based on your goals. For example, if you are a beginner, you should choose one company. On the other hand, if your goal is passive investments, you might choose a different broker.
- Pay attention to regulation. A broker should be regulated in a developed country with a robust legal culture.
- Study the trading conditions carefully. They should be consistent with your original purpose. For a beginner, a low initial deposit and a demo account are essential, while for a professional trader, the speed of trade execution, liquidity, and the choice of trading instruments are of great importance.
After we have figured out the basics of what you need to know to make your choice, we will consider the features of the best forex brokers.
General Guidelines
Some large brokers are suitable for certain purposes as they provide a range of other financial services:
- A large selection of trading accounts for beginners and pros;
- Tight spreads;
- In addition to currency pairs, they offer many other trading instruments, such as CFDs and stocks;
- A wide range of trading platforms for traders with different needs and preferences;
- Various possibilities for auto trading and bots;
- Passive investment options.
Best Forex Brokers
Beginners have different needs than professionals. The availability of brokerage services and good opportunities to study trading are essential. Experts classify companies with the following advantages as the best forex brokers for novice traders:
- Low minimum deposit;
- Demo account without duration limit;
- Cent or micro account to learn trading without risks;
- A large number of educational materials, seminars and forex courses;
- Developed copy trading for repeating professionals’ trades.
Passive Income?
Active trading is not for everyone. Many potential clients are not ready to spend many months training and practicing. The best passive investment brokers can offer the following passive income options:
- Copy Trading allows you to copy the trades of professional traders automatically using unique social platforms. Subscribing to and unsubscribing from the trades can be done in a couple of clicks;
- PAMM / RAMM investment involves transferring funds to successful traders for management;
- Strategy Builder allows you to create your strategy using built-in tools and then automate it.
Best Forex Brokers For Other Needs
Of course, traders may have special needs requiring forex brokers’ unique tools. For example, tight spreads and high liquidity are essential for scalpers. After all, slippage and commissions can simply destroy their profits. For fans of volatility, brokers must have cryptocurrencies that may rise or fall by tens of a percent within a day.
Pay Attention To Regional Differences
Draw your focus to regulation again. Forex broker ratings do not always take into account regional differences. If you are a resident of the United States, it will be essential to work with a registered broker in this country. For example, the applicable regulators can be the Commodity Futures Trading Commission (CFTC) or National Futures Association (NFA). Otherwise, you simply won't be able to start trading. For residents of EU countries, the situation is somewhat more straightforward. In most cases, it will be enough for the broker to be regulated, at least by the member nation. Most often, brokers in the EU choose Cyprus as their place of registration.
Final Words
The advantages of forex trading include the possibility to trade on short-term and long-term periods, use various trading instruments, profit from non-standard situations, and profit from the difference between the actual currency rate and the forecast one.
It is essential to choose the best forex broker for your goals. Selecting the best forex broker is critical since it will directly impact your trading results. The main features you should pay attention to are the size of commissions, the number of trading instruments, and the speed of trade execution.
However, the most important thing to consider when choosing a forex broker is your own goals. This is a factor that cannot be overlooked. Each individual has different goals that they would like to accomplish. Before choosing a forex broker, you have to ensure that they have the correct currency pairs, the right leverage, and the proper regulation. As you can see, there is a lot to consider when choosing a forex broker.
A reliable and professional broker would require some sort of a deposit from you. The best indication that the broker is professional is that they have a minimum deposit requirement.
You should also look at the commissions of your selected broker. They are usually expressed in pips, the smallest value of currency pairs. Each pip corresponds to 0.1%. Thus, if you make one trade per day on average, you will pay 0.1% of your trade volume on commissions. The larger your volume of trades is, the more money you can save by choosing a broker with low commissions. Another critical factor is the speed of order execution. A professional trader will place several orders at once and watch their performance until all orders are completed. If some of them are executed quickly, while others are performed very slowly or not at all, it is better to find another broker to work with on forex trading.
