Today forex is the largest financial market around the world with a value of over $4 trillion traded every day. It is an online market with no particular marketplace, which makes it accessible for worldwide traders 24/7 for five and a half days a week. The traders connect with forex brokers to conduct their trading activity. There is a large number of forex brokers that are available for trading in the market. The process of finding a reliable forex trader can become daunting if you do not know what you are looking for. Here are the five important things to look out for when you are choosing a forex broker.
A forex broker should be a member of the National Futures Association(NFA) and should be registered with the US Commodity Futures Trading Commission (CFTC). They need the accreditation as a futures commission merchant and retail forex dealer.
NFA is the self-regulatory organization for the futures industry in the US. It creates rules and programs to maintain fairness for the market, traders, and investors.
CFTC is an independent government agency that forms regulations for futures and options markets in the US. It was established to protect market users and investors from any fraud, manipulation, and abusive practices in the sales and financial futures and option. It also aims to foster open, competitive, and financially appropriate futures and options markets.
Every broker offers different account features which include leverage and margin, commissions and spreads, initial deposit, and ease of deposits and withdrawals. Forex participants have access to several leverages that they can offer to investors. Brokers also make money through commissions and spreads. Some of the brokers may not take any commissions at all and make money from the spreads. The brokers should also offer standard or more compact initial deposits to the new traders to introduce them to the market.
Currency pairs offered
Different brokers can provide different currency pairs in the market. One must go for the currency pairs that offer the greatest liquidity such as US dollar/Japanese yen, Euro/US dollar, and the British Pound/US dollar. It is not important whether the broker has tons of currency pairs unless they have the pair that the investor is looking for.
Since forex trading occurs 24 hours a day, the customer support for the clients should always be available. For an agency, the customers should be able to speak to the brokers immediately instead of waiting for their mail. A good forex broker should always be available to take your calls and help you in finding quick opportunities.
A good forex broker should use a trading platform that has a variety of technical and fundamental analysis tools. The tools should make trading easy for customers as they should be able to enter and exit trades quickly. A good trading platform should have easy-to-access buy and sell buttons to take instant actions. There should also be a panic button to close all positions immediately. A poorly designed platform can lead to costly mistakes for investors that can damage their portfolio for future trades.