For a lot of traders, success and profitability rely heavily on the broker they choose to work with. You can do everything right, have the perfect strategy, and know your numbers, but all of the above just won’t do if you do not have the right broker to execute your deals. Here is the list of things you need to pay attention to when looking for a perfect broker.
Security and Regulation
Security is regarded as one of the most crucial elements of trading currencies for a reason – there is a lot of money involved, and no one is willing to trust a broker based solely on their word of honor or nice personality. Fortunately, it is not very hard to check the broker’s credibility nowadays by assessing whether it possesses a license from one of the FX financial regulatory bodies.
Regulatory bodies exist to protect the general public and ensure the integrity and proper conduct within the brokerage industry. The broker, therefore, needs to obtain a license from one of those agencies to provide its services to the customers. Brokers operating in the EU often tend to obtain their licenses with the Cyprus- based agency CySEC, as it is much cheaper, all while holding the same authority as the other existing organizations. Moreover, findings of the recent T1Markets review shows that CySEC, which was previously criticized for its accommodating, friendly attitude towards the clients, has now adjusted its operation and requirements in a way that would leave no skeptical expert in doubt about the organization’s legitimacy. Nevertheless, many EU-based brokers often seek a license from other bodies such as the UK-based FCA, Germany’s BaFIN, and the AMF in the Netherlands. Licenses from any of the aforementioned bodies add legitimacy to the broker of your choice, and it’s only the absence of the licenses that you should be worried about.
Spreads and Commissions
One thing that all traders can agree on is the fact that when trading they are looking for the maximum income and minimum costs associated with the process. Consequently, when looking for the right broker those things are what one should be keeping in mind. Although pin down a single broker that provides the best conditions for its traders, here are some things that you might want to consider.
Most brokers earn their profits based on spreads, which, put simply are the difference between the bid and the ask prices. When examining your options, try and find a balance between the security and the costs associated with it, especially if you know that your chosen kind of trading will be linked with tight spreads. Furthermore, some brokers charge commissions on each transaction but usually provide some exclusive services in return. In that case, the advantages of proper research cannot be overlooked.
Leverages, Deposit And Withdrawal
Leverage in trading is what allows traders to multiply their deposits to reach the maximum trading value. Thus, checking the leverage that the broker offers is a good way to assess whether the broker best suits your interests. This is especially true for those who are just beginning to get into trading, as the conditions under which the beginners can access leverage may differ.
Another factor to pay attention to is how easy it is to deposit and withdraw your funds. A reliable broker would have no reason to withhold your money, and the process of depositing and withdrawing should be as fast and straightforward as possible.
Customer Support
Trading is an extremely sensitive process and the sole source of income for many. Mistakes and glitches in systems are inevitable in any industry, and especially in the one that relies heavily on the smooth-functioning technology, such as the FX trading itself. It is, therefore, important to double-check the efficiency of the trader’s customer support services before fully committing to one. In many cases, a well-functioning customer support system will make al the difference for the traders, who are already undergoing a significant amount of stress.
Education
A good broker would only benefit from the success of its clients, and, thus, will do everything in its power to facilitate that success. Most brokers provide its traders with informational articles, educational webinars, and video guides that are usually free to use. Those education materials often come especially handy for those, who are only just getting into trading and are not particularly sure about what they are doing. The absence of educational materials can often be a sign of a broker that is not trustworthy, and, should, therefore, be avoided.
The aspects discussed here are not the only things that one should be paying attention to, and, should rather be used as a point of reference when searching for the broker that is right for you and your level. The list is definitely not exhaustive, and one should never underestimate the importance of conducting thorough research before making the final decision.
