How To Choose The Right Broker in FX

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How To Choose The Right Broker in FX

Postby adamsmith » Wed Feb 10, 2016 2:03 am

Hunting for a forex broker is never quite easy. You could run into a Market maker posing as ECN, you could be a victim of fraud; you could be subjected to illegal practices. Below are a list of things one should be checking while choosing a broker for forex trade:

• Nature of Security
You need to check what you’re signing up for. Start by running a thorough background check on the broker you’re planning to hire; and especially check whether they are registered in the list of brokers maintained by the market regulating agency of your country.

• Transaction Costs
We all want a broker with cheaper transaction rates, and therefore, we tend to look for a brokerage that charges the minimum commission. But in the course of doing this, you need to remember that sometimes all that glitters is not gold. Fraudulent brokers might try to hook you by dangling suspiciously low rates; but don’t fall for them. Sometimes it’s more advisable to forego economy in favour of trust and lowered risk.

• Transaction Ease
One of the ways in which you can easily recognize a genuine broker is that they’ll go out of their way to make the deposition and withdrawal processes smooth for their clients.

• Convenience of the platform
The trading platform of the brokerage is another factor you need to be on the watch for. This is very important. Almost always make it a point to check if the platform has options such as ‘free and live market news feed’, smooth in operation charts and tools, and if the ‘stop loss’ and ‘take profit’ buttons and options are specified clearly on the user interface. To sum it up, you need to see whether it is comprehensible, hassle-free and above all, convenient to use.

• Execution
You broker should always be actively acting in your interest. In other words, he should fix or close your trade for a price that is closest to the price which was displayed on the screen (when you clicked the ‘buy’ or ‘sell’ button). For example, if you click the “buy” button on a price of denomination USD $3,500, then that’s the price that the broker should fix you for, or at least very close to it (assuming no major change, events or announcements have taken place which would have the potential to change the market direction). Also, the speed of the execution of orders, is something you should watch out for.

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