The Forex market right now is the world’s largest trading hub. It is so simply because of the number of options, transactions and sheer volume of currencies traded. It also works around the clock and is constantly in operation from Monday to Friday. Trying to figure out where to begin, how to trade and how to make these trades in a safe and profitable manner is not something that is easy or even simple to understand beyond the conceptual stages.
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The advent of online trading is what has taken Forex to the next level, allowing anyone, in any part of the world to make trades. The process in general, however, can be made much more effective if you can find a good Forex broker. Here is a simple step by step on how to choose the right Forex broker, one that will work for you. There are literally thousands of brokers to choose from, some better than their peers, so do your research while keeping this guide handy.
Step 1: Look for a regulated broker
In addition to being regulated, choose a broker who operates out of a country or region that is known for strict trading and banking rules. If your broker is based out of the USA, for example, the law is designed to protect you. Getting away with fraud is not simple here, but if your broker was positioned in some sanctioned region or in a country with poor or non existent legal procedures, there are chances of you losing a good amount of money if things don’t work out. Think of it like this, would you take a vacation to the country, or feel comfortable opening a business there? That is how you should treat your trading decisions. Whole economies are going bankrupt, so a brokerage firm going out is not something that cannot or will not happen, so make sure you are legally protected before going in with your money. There is no real point in having a tight spread if your cash will not come back to you.
Step 2: What kind of account is on offer?
Step 3: What trading platform is used?
First, the interface has to be clean and easily navigable, it may only be a cosmetic thing, but interface is as important as any other part of the platform as it involves user experience. It also need not be bright and filled with flashy colors as it can be distracting. A neat, readable and clear interface is what you are looking for.
Third, look for levels of security and what traders call multiple eye checks. They act as gateways that will ensure you don’t make any errors as far as inputs are concerned. It is done by simply asking you, or the trader if they are sure and until you click on a positive acknowledgment, the trade will not go through. The Buy and Sell buttons should also preferably have such options for added safety. Not many platforms offer this, but look for a Panic button. It is nothing but a way to stop all transactions instantly. If you have made some mistakes or if the markets are moving in a way that is not good for you, you can immediately pull the plug on the platform, a stop loss mechanism.
Step 4: Compare
Similar to the way you would purchase insurance or set up a mutual fund, shop around. You are bound to have questions and doubts, get them clarified. The biggest name in the industry need not necessarily be the one that works out for you, so don’t get blindsided by name brands.
Step5: How is the customer service?
A person on the other end of the line, however, can be resourceful. Expert call handlers can take you through your requests and even patch you on with others in departments that are more equipped to handle your inquiries. I addition, small doubts regarding rules, platform related questions and updates of regulations from governments can also be gotten first hand. The best place to look for how good or lacking a firm’s customer service will be review sites. There are plenty online and some of them can give real insights into how the firm handles their customers. Take reviews with a pinch of salt, some customers cannot be satisfied and some may just be rash and rude. You can speak directly to your broker as well, find out as much as you can about customer service.
Just know that your returns initially may be a bit on the lower side and it takes persistence and getting to know the market better to slowly expand gains. If a broker claims a high return percentage every time, or if the numbers seem unreal to you, be wary. There are a number of scam artists out there, especially when they are based solely on online transactions. The market is difficult to regulate and because the brokers may be operating out of pretty much any country in the world, they may be impossible to track. Choosing a Forex broker is not something that should be taken lightly, put some time and effort into the process. It will literally be worth your money!