Forex broker acts as an intermediary party between a trader and Foreign Exchange (Forex) market. If you are trading a currency or commodity pair, your buy or sell order will be executed by a broker and against such service, the broker charges some commission or spread. Selection of a good broker is the first milestone in currency trading; unfortunately many beginner traders lose money thanks to unregulated and scam brokers. Here in this article we shall loot at various characteristics of a good broker.
A broker should be regulated and monitored by the state authority of the United Kingdom, Japan, Australia,the United States or any European Union (EU) country. These countries have strict monitoring on broker’s working status.
Exact execution of an order is also a key characteristic that a broker must possess. For instance, if you intend to open a long position in EUR/USD pair at a price 1.37809, your broker should execute your transaction exactly at the same price without any re-quote or delays, because timely entry or exit is something that matters a lot in Forex market.
Another thing that should be considered about a broker is the leverage. If you are a scalper, you should look for high leverage brokers; nowadays some brokers are offering leverage up to even 1:2000. Needless to say, never compromise the quality and legal requirements due to high leverage.
Spread is a remuneration that a broker charges against its services, top brokers usually charge around 0.2 to 3 pips spread on major currencies. You should try to find a broker with minimum spread.
Instant Withdrawals & Deposits
A broker should be able to process your deposits and withdrawals instantly without any useless inquiries and delays. Nowadays, a few brokers offer the facility of automatic deposits and withdrawal that take only a few seconds to process your money.
24/7 Customer Support
In case of any technical issue or query, a broker must be able to offer 24/7 quality customer support services ideally in a number of major languages. In addition to solving clients’ issues, good brokers also offer daily fundamental and technical analysis on major currency and commodity pairs.
This was a brief account of various characteristics that a broker must possess. Now let us discuss how to find a good broker.
How to find a Broker?
There are a number of websites that offer facility to compare brokers with different categories such as regulated brokers, low spread brokers, high leverage brokers etc. you may find such portals with a simple goggling. Once you have selected a broker, you have to check the trading platform andother services of a broker by opening a demo account.
Spend some time on demo and get all the relevant details from your account manager. Make sure that the broker open each and every position at exact price, compare the quote feed with other sources to ensure it is not false and trade in highly volatile market to check whether the broker safeguards losses due to slippage.
EgorProkof’ev is a Forex enthusiast and blogger who writes about different online trading tools and strategies. He is also one of FXOpen corporate blog analysts and ECNSTPFX.com contributors.