How to Choose the Best Online Broker for Forex Trading
What is forex trading?
Forex trading is when you speculate about the price of one currency against another currency. For example, if you think that the Euro will rise against the US Dollar, then you can purchase the EUR/USD currency pair at a low price and then, hopefully, you can sell it at a higher price and make a profit. If you buy the Euro against the Dollar (EUR/USD), and the Dollar strengthens, then you’ll be in a losing position.
There are different factors that influence forex prices. These factors include interest rates, inflation, employment figures, government policy, and the demand for imports and exports.
Because of the volume of currency traders and the amount of money that is exchanged in forex trading, the price movements can happen very quickly. Therefore, while there are many currency trading opportunities, forex trading is incredibly volatile.
How to choose an online broker for forex trading
Since there are hundreds of different only forex brokers, the choice can be overwhelming. Your money’s security is the most important concern when getting involved in forex trading. You should be able to withdraw your money whenever you want to.
Consider your tech needs and trading style
Beginners to forex trading may not plan to trade as frequently as others. In this case, you should try to avoid the brokers that charge a fee for inactivity if you do not meet a specific minimum number of trades per month, quarter or year. You should look for the brokers that offer the types of investments that you want for forex trading at the most feasible price. At this stage, you probably will not need all the extras, such as an advanced trading platform.
On the other hand, active traders will want an online trader that supports that amount of frequency. This includes weighing the trading platforms of a broker, analysis tools, data and research offerings as well as commissions, and fees.
Because there’s so much competition in the Forex (FX) market as well as having countless brokers to choose from, it can be difficult to know which online FX Broker will be best for you. Beginners have different needs than more advanced traders, so these are a few key points we suggest keeping in mind when making your decision:
Each country has its own regulatory body such as the Financial Conduct Authority (FCA), here in the UK. The regulatory body develops rules, services and programs to protect the integrity of the market, traders, and investors as well as the brokers themselves, and to help members meet regulatory responsibilities. Due to potential safety concerns regarding deposit, accounts should exclusively be opened with firms that are regulated.
Online FX Trading takes place 24 hrs a day, so customer support should be available at all times. Ideally, you will want to speak with a live support person rather than a time-consuming auto-attendant. Give a quick call to the customer service center to get an idea of the type of customer service provided. Check on wait times and find out the representative’s ability to answer questions regarding spreads and leverage, their trade volume, as well as company details.
Your ideal FX broker should be able to offer either multiple account options or an element of customizability. Look for an online Forex Broker that offers competitive spreads and easy deposits/withdrawals.
Find out if there are account options specifically for beginners and if so what that account offers to benefit new traders.
An online Forex Broker can provide a huge selection of forex pairs. However, it is most important is that they provide the variety of pairs that interest you. While there are many currencies available for trading, there are only a few get the majority of the attention, and as the result, trade with the highest liquidity.
While selecting the best FX Trading Broker for you, it’s possible just to concentrate on Forex trading. However, you should keep in mind there are many types of investment alternatives offered as well, such as Bitcoin, Stocks, CFDs, ETFs, or trading in options or futures.
The trading platform is the investor’s portal to the markets. So with that in mind, look for a platform that is easy to use, straightforward and offers an advanced collection of analytical and technical and tools, to enhance your trading experience.
For more information, please see our tutorial: What is Forex?