With the Forex market being home to some $5.3 trillion daily, selecting an online Forex broker to access the world’s largest market is a task which many find overwhelming. There are many online forex brokers to choose from, so here are a few things to consider before committing to one.
Are they regulated?
Regulation is one of the most important aspects to take into consideration when choosing an online Forex broker. You need to ensure that they are regulated and have the security and oversight required before you even think about starting on your trading journey. Unfortunately, many brokers are lurking on the web that are not adhering to strict regulatory rules, discovering the reliability of an online Forex broker is easier than you think. There are several major regulatory jurisdictions to look for. In the UK FSA has regulatory oversight of forex brokers. In Australia ASIC is the main regulatory authority. In the US the NFA and CFTC are the authorities to look for. In some countries like the US only NFA and CFTC regulated brokers can offer their services to US residents.
Are they there to help?
Another important characteristic to keep an eye out for when choosing your online Forex broker is their form of customer service. With the markets being open 24 hours a day, it is vital you have the trading support you need to trade the markets effectively. Efficient customer service is where you can access a live chat and speak with an actual person and not an automatic system. How responsive is the brokers support team? Are they able to answer your questions? Do they have the knowledge to guide you when needed? These are a few things you should take into consideration when speaking with a customer service agent.
What is the spread offering?
This is an aspect that will affect your trading immensely, so it is vital to examine what spreads are being offered. Whether you are trading pairs like EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD or USD/CAD, a guideline to keep in mind is that the spread should not exceed 5 pips for these major currency pairs. The wider the spread, the more challenging it will be for you to make a profit, thus always opt for an online Forex broker offering tighter spreads.
Do they offer demo accounts?
Before leaping to deposit funds into a live trading account, it is of the utmost importance to trade on a demo account. Though this may give no indication to your success when trading live, it is a great way to get a feel for the platform, discover what the broker is offering, and develop and test your trading strategy. Trading on a demo account will give you an insight as to what your experience will be like trading with the chosen online Forex broker.
How is their website?
Aside from the more technical reasons, an online Forex broker’s website can tell you a lot about how reputable it is. Does the site give you all the information you need? Does it look professional? Can you easily navigate around the site? Does it crash? These are just a few of the questions that you need to ask yourself, before trading.
Your research into choosing an online Forex broker could potentially be the decision between making or breaking your trading results. Be aware of all these items mentioned before delving into a trading journey and trading with a forex broker.