Why is it So Tough to Decide on a Forex Broker?

A forex broker is not just an intermediary that charges a fee for the list of tools and services that it provides. This is a financial partner of each trader, which is an important link in the “trader-broker-market” chain. Undoubtedly, the decisive role in the success of any trader is played by his personal knowledge and experience. But without a reliable intermediary in the person of a broker, all these skills lose their value. Therefore, the choice of a Forex broker is a serious and responsible task, with this all successful players in the market began their journey.

How to choose a good Forex broker – key criteria

Each trader has his own idea of the ideal broker. Beginners pay attention to the quality of training programs, more experienced traders are interested in the presence of certain trading tools, the possibility of applying various strategies, the size of the spread and other features. There are general criteria for choosing a reliable brokerage company. Let’s consider them in more detail.

Reliability

This criterion determines the degree of protection of the trader from all kinds of non-trading risks. A reliable broker must have a license for his type of activity, which is monitored by independent experts (regulator). The latter performs regular quality checks of the services provided, has the authority to revoke a license if it does not meet its requirements. 

To speed up the registration process and save money, many companies use offshore schemes. This approach allows them to hide information about the founders, not to provide reporting documentation. They do not recommend choosing such brokerage firms, since offshore regulators often perform their functions only formally.

Available tools, terms of trade

A good broker should offer all existing trading tools on the Forex market, including securities, indices, metal value difference contracts, other assets. Equally important is the company’s desire to expand the list of trading instruments, taking into account the characteristics of an ever-changing market. 

Particular attention is paid to the available types of trading accounts, the proposed trading conditions for them. When comparing several brokers, the following parameters are considered: spread, leverage, account limit, transaction fee, swaps.

The speed of processing client applications is one of the key characteristics. In the absence of requotes, the optimal processing time does not exceed several seconds. The faster they process orders, the higher the probability of opening a transaction at a price that is favorable to the trader. The best and most reliable brokers use STP, a mechanism for end-to-end processing of orders with parallel withdrawal to the interbank market. It provides the most transparent terms of trade. 

Commissions

Honest brokerage firms make their profits from commission fees. They withdraw all or most of the transactions to the liquidity provider, which indicates the use of a transparent broker work scheme. Commission fees include transaction fees and spreads. The latter can have a variable or fixed value, characterizes the difference between the purchase and sale prices (bid and ask, respectively), which depends on the time of trading, the volatility of the used trading pair.

Platform

Xtrade is a classic version used by many brokerage companies. She is well known to many traders, has a positive reputation. Xtrade is characterized by high performance, reliability and ease of use. Choosing a forex broker using an unknown platform is not recommended.

Minimum Deposit Amount

A high entry threshold is a criterion that characterized reliable brokers several years ago. Today, even companies with an impeccable reputation set a deposit limit of only $ 100-200. Therefore, the size of the minimum deposit is no longer the main feature of a good broker, but does not lose its significance for beginners who do not have large amounts of start-up capital.