How To Choose The Best Forex Brokers In The Market
Forex trading is an attractive investment opportunity for those who wish to indulge in the exciting world of currency markets. Traders can take advantage of the incredible amount of volatility in the markets due to the large trading volumes that the market witnesses on a daily basis. However, the choice of a Forex broker has the potential to either make or break a trader’s career. Trading is in itself a risky business, and adding a questionable broker into the mix will only complicate matters further.
During the early part of the 2000s, several traders lost a significant sum of money in Forex trading due to unreliable and scam brokers. Dishonest brokers used a wide variety of techniques to drain money away from their traders’ account. Instances such as huge leverage, opening trades against the trader, price manipulation, and faulty trading platforms were rampant during the early days. Even in the current scenario, there are several Forex brokers who follow less than honest means of Forex dealings to pry money away from unsuspecting traders.
Not all brokers should be considered as a scam, as Forex is a credible financial market that has the potential to become hugely profitable for a trader who has an excellent knowledge of the markets and ability to trade without emotion. Numerous top rated Forex brokers facilitate comfortable and convenient FX trading for traders who wish to enjoy a safe and secure trading environment.
Consistent Results With Top Forex Brokers
Several top Forex brokers in the industry are dedicated to the upkeep of their clients’ interests by offering a transparent and honest brokerage service in the currencies market. At Binary Options Trading, we have a list of some of the top rated Forex brokers in the industry that has a great history of fair and honest dealings with their clients.
Choosing the right broker is important from a trading perspective. Trading terminals are usually connected to a liquidity provider that offers live price feeds and connects a trader’s position to the global liquidity pool. The entire process of trading should be automatic, and the dealing desk should not have any conflicts of interest with their client’s open positions. Most problems associated with broker scams in the past decade arose due to the avaricious nature of brokers to earn money from their clients’ downfall.
Nowadays, the best Forex brokers have taken the concept of dealing desk out of the equation to provide traders with direct access to the liquidity pools and interbank exchange rates. This has helped traders to receive accurate price quotes and minimize the effect of significant slippages or untimely re-quotes. Such a seamless trading process has helped traders to enjoy consistent results in the markets and were able to invest in currency pairs according to their market research and analysis.
Carrying Out A Thorough Forex Broker Comparison
Traders should always consider it their top-most priority to perform a detailed Forex broker comparison to find which company provides better features, functionalities, and trading tools according to their preferences. Different brokers offer different packages that are aimed at providing flexible and scalable services to clients according to their investment capital and risk appetite. Not all traders are the same, and a one-size-fits-all brokerage account can never do any wonders for the determined trader.
Take your time to browse through different Forex brokers, even if it is a time-consuming process. At Binary Options Trading, we make the process a bit easier by comparing several different Forex brokers so that you can compare them according to a standard baseline. Comparing different brokers not only offers the chance to choose a good broker according to your requirements but can also expose you to the various tools and resources employed by different traders to enjoy consistent trading results.
Numerous Factors To Consider While Browsing Through Forex Trading Websites
A trader should always consider a wide variety of factors before choosing a Forex broker. Several Forex trading websites might entice traders into thinking that they are the best in the business, but when it comes to reliability over an extended period, there are a few nascent features that should be carefully scrutinized before depositing money into a live trading account at that broker.
A broker should be regulated by any one of the leading regulatory agencies in the world, preferably from the US, Europe, Australia, or Asia. Regulation is essential as regulated Forex brokers are required to follow a strict code of conduct as prescribed by regulatory frameworks that are reinforced to uphold market values and safety of client funds. Several regulatory agencies such as the FCA, CFTC, NFA, ASIC, and CySEC are known to protect investor rights proactively by regulating Forex companies to ensure that they adhere to the standard protocols.
Once again, the location of the Forex broker is directly related to the regulation, and under some circumstances, related to the legality of trading Forex in a trader’s country. For instance, US traders are legally bound to open live trading accounts only with brokers that are regulated in the US. This is done so as to ensure that all traders comply with trading guidelines that are enforced by the NFA and CFTC from time to time. Therefore, the location of a broker is crucial for a trader as far as trading without legal restrictions is concerned.
Not all traders are gifted with a huge amount of capital with which they can trade the markets. The size of investment and the funds can vary according to individual trader needs, and it is the job of a Forex broker to cater to the different types of traders by offering different types of accounts that suit individual investment needs. The best FX brokers in the industry usually pay particular attention towards ensuring that all clients are treated fairly and with the utmost respect. Traders should not be discriminated based on the size of their initial investment or the reputation of the trader.
Safety Of Funds
All client funds should be kept in segregated accounts that can be withdrawn without any restrictions. Most regulated brokers are required by law to keep funds safe and secure against any broker related issues such as insolvency or hostile takeovers. In the event of a company becoming insolvent, all client funds, including profits, should be returned to the trader without fail.
Forex is popular due to the leverage available to trade in the markets. Some brokers even advertise a monstrous leverage of 1:3000, which provides an enormous amount of margin on trades. Trading on margin is always a risk against a trader’s capital, as the volatility of the markets can wipe out entire trading capital with a small move in the wrong direction. On the other hand, all traders in the US are required to trade only using a maximum leverage of 1:50, which forces all brokers in the US to adhere to such a regulatory framework. A trader should always consider the risks and rewards associated with leverage, and should not open an account with a broker just because they offer a high leverage.
A trader should have access to a comprehensive set of trading tools and resources to help them with their trading. Almost all trading terminals such as the Metatrader and Trading Station have a host of instruments and indicators built into the platform that allows a trader to perform a broad range of technical analysis according to his needs. It is important for traders to stay away from brokers that don’t provide a convenient and feature-rich platform that is devoid of any tools and indicators. It might come as a surprise, but several brokers operate in the markets to make some money and are not concerned about designing a good trading platform that can help a trader to perform an extensive analysis of the markets.
What Are The Costs Associated With FX Trading?
The first and primary cost of trading is, of course, your trading capital. The investment amount should be deposited with a broker, and traders should only deposit money into a trading account that they can afford to lose. Trading is inherently risky. Therefore, professionals in the field recommend a trader only to invest money into trading that will have no significant impact on a trader’s lifestyle. Every trader should invest money with the full knowledge that they are bound to lose the entire amount sooner than later. As far as trading costs are concerned, traders should be aware of some the primary costs such as:
Spreads are the difference between the ‘bid’ and ‘ask’ prices (more commonly known as the ‘buy/sell’ rate). Spreads are determined by the liquidity provider as well as the broker and are the profits that they enjoy. Every trade is associated with a spread; however, several ECN brokers advertise zero spread on a majority of currency pairs. In reality, most currency pairs in the market will have a spread of at least one pip.
SWAP and interest rates are fees associated with overnight trades. These are the costs incurred to keep the trades open overnight, or past the close of the US session into the next day. Brokers provide margin or leverage in the form of debt, and the SWAP rates are primarily charged to honor the trades by ensuring that the brokers profit from all the money invested by them in the trade. SWAPs can be both positive as well as negative, and is dependent on the difference between the interest rates prevalent in the respective countries. Negative SWAP is paid to the broker while positive SWAP is given to the trader. For example, in the currency pair GBP/USD, the SWAP is determined by finding out the difference between the interest rates of both the UK as well as the US.
Commissions are charged mostly for an ECN account that links a trader directly with the liquidity pool. Commissions are one-time fees that are incurred when the trade is opened, and the entire commission is paid to the broker. In ECN accounts, the typical spreads are lower than in regular trading accounts, which is why FX brokers charge a commission to enjoy some profits. ECN accounts are known to have spread as low as zero, which can help traders to enjoy tight spreads on their trades.
Deposit and withdrawal fees are not too common among Forex brokers, but such fees are dependent on the deposit/withdrawal options and the payment policies of the broker. Some brokers usually waiver such fees to encourage traders to deposit funds with them, but some brokers are reluctant to bear the burden. It would be a good idea to choose a broker that is willing to share the fees with the trader or eliminate them to offer a great customer experience.
The Different Trading Platforms Offered By FX Brokers
Traders these days are spoilt for choice when it comes to trading platforms, and it is essentially a good thing. Metatrader is one of the most popular and extensively used trading platforms and is designed primarily for the desktop. Other desktop platforms include the Trading Station, Web Browser platform, and other types of proprietary software that are exclusively developed by the leading brokers in the industry.
Traders also have the option of trading on the move by installing mobile trading platforms on their smartphone or tablet. Most brokers are now offering dedicated mobile trading platforms for both the Android as well as iOS platforms and some brokers also provide a mobile trading platform for windows mobile.
A trader has access to a large number of Forex trading sites by browsing through several online resources, which allows the trader to trade the currency markets according to their preferences. Ultimately, choosing a broker will decide whether a trader can enjoy consistently profitable results or end up losing money due to a troublesome broker experience.