There are a lot of factors to consider when picking a broker to trade with. From regulation to spreads and funding methods, this article will focus on the top tips which will help you to find the best forex broker for your trading needs.
- Regulation
It’s crucial to trust your forex broker, so look for ones that are licensed by reputable authorities. In such jurisdictions, client money is typically segregated from the broker’s funds. This segregation puts safety in place for your funds. In some places, there are also compensation funds in place when a broker defaults. One such regulation is the Financial Conduct Authority (FCA) in the UK. Brokers which are regulated by a financial authority of a member state of the EU usually also have such compensation schemes in place. The top and most desired regulations by traders now are FCA, ASIC and to some extend CySEC. Therefore, picking an FX broker which is regulated by one of these authorities is usually a good sign that a broker is safe to trade with.
- Leverage
Typically, FX traders seek high leverage, to be able to open big trades with a small amount of capital deposited in their account. Until a few years ago, all the top regulated brokers had the opportunity to offer high leverage (up to 500:1) to retail traders. Nowadays, this is no longer the case and leverage is typically capped at 30:1 for retail traders who have accounts with FCA, ASIC, and CySEC brokers. One way to manage to get higher leverage with brokers who are regulated by the top jurisdictions is to manage to obtain professional status, but the conditions are quite high and therefore it’s difficult to get it. The other way to get higher leverage is to look for offshore entities of these regulated brokers or usefully offshore brokers. These options could prove risky, especially the second one, therefore approach with caution.
- Trading Platform
Forex traders tend to favor the Metatrader platforms and MetaTrader 4. Although MT4 is still offered by a lot of brokers, it’s worth checking whether the one you chose still offers it. One of the other platforms popular with retail traders is Metatrader 5. Many brokers offer their own platforms as well. Other popular platforms include TradingView and cTrader, but these are still niche and not offered by a lot of brokers.
- Funding options
It’s important for a broker to offer a variety of funding options for FX traders. Usually, bank transfers and debit/credit card deposits are offered by most brokers. If you however want to fund using PayPal, Skrill, or Neteller you may need to check beforehand that the broker offers this option. Some brokers may also offer crypto deposits, but again you need to check before opening your fx trading account to avoid disappointment.
There are more factors that need to be considered when finding your ideal FX brokers such as spreads, types of trading styles allowed, and many more. Some solutions can help you to find your broker in a few easy steps.
