ForexNewsNow – Using the best forex broker for your trading business makes up a key element for success in the forex market. Knowing what to look for in a forex broker can save a trader a considerable amount of money, time and frustration.
Your broker will essentially be your principal trading partner and responsible for providing you with timely executions and placing orders in the forex market, which can significantly impact your performance trading.
Considerations for Selecting an Online Forex Broker
The most important aspect most people consider when selecting an online forex broker is the safety of funds. An honest assessment of the broker’s reputation and whether other traders have had problems or issues with their trading results makes up a good starting point for finding the best forex broker.
Assessing potential problems with an online forex broker can best be done by going to a number of forex online forums where traders discuss forex brokers and their performance. One of the most aggravating situations for a trader besides taking losses trading is having a fraudulent broker refuse to return your account balance on demand.
Avoiding fraudulent brokers can best be achieved by verifying that the broker is regulated by some form of regulating body such as the U.S. Commodity Futures Trading Commission or CFTC and the National Futures Association or NFA. Outside of the United States, the Financial Services Association or FSA in the UK and the Australian Securities and Investment Commission or ASIC serve the same purpose as the CFTC and NFA.
Other Aspects to Consider
Once you have narrowed your list to a few reputable online forex brokers, you can then evaluate the brokers’ trading software. Many online forex brokers offer their own proprietary trading platforms; although some brokers support the MetaTrader trading platform, which offers the trader many useful features. These include charting and other technical analysis tools, as well as an automation feature which can host expert advisor software.
An excellent evaluation method to find the best forex broker would be to open demo accounts with several online brokers. Demo accounts offer the trader the possibility of trading the forex market without risking any funds.
Trading with virtual money in a demo account allows you to get an overall picture of how the online broker will perform in a live trading situation. Nevertheless, be aware that demo accounts have their limitations and often do not accurately reflect live trading conditions.
Another important aspect before opening an online trading account consists of the broker’s bid/offer spread. Forex brokers generally do not charge commissions, taking a small amount off of the bid/offer spread instead. Wider spreads benefit the broker, while tighter spreads can save a trader a considerable amount of money when actively trading.
Basically, the most important elements for finding the best forex broker consist of:
- Security of Funds – an online broker should be regulated by at least one regulating agency and should have good reviews on forex forums.
- Fast Reliable Execution – the broker should be able to provide timely and efficient service filling orders with a minimum of “re-quotes”. Re-quotes are generally given in volatile markets.
- Efficient Trading Platform – the broker’s trading platform should be easy to use and allow the trader to accurately analyze the market.
- Competitive Spreads – the bid/offer spreads on currency pairs should be competitive, with highly liquid pairs such as EUR/USD and USD/JPY with very narrow spreads.
Less experienced traders should evaluate the broker’s educational resources and practice trading using the brokers trading platform before committing funds to an online trading account.