The biggest trade you’ll ever make is the forex broker you choose. You’re transferring all of your trading capital to that firm, with the assumption that you’ll be able to trade with it and reclaim it when the time comes to take your profits.
You may have excellent forex strategies, but if your broker absconds with your money, everything you’ve done will be for naught. If you’re looking for in-depth tips on how to find a great forex broker, you can check it out here.
What are your needs?
Before you can select a broker, you need to know, are you day trading or not? Do you want to make big or small moves?
Consider an ECN broker if you day trade frequently and make small changes. You’ll pay a commission on transactions, but the spreads are far narrower, which is significant when trading slight movements.
Do you have enough money to start a business? You’ll need a certain amount of cash to trade micro-lots. If you have more than $5,000, you can begin day trading small lots. Don’t create a standard lot account unless you have at least $50,000 in your regular account.
Choose your broker and lot size based on available funds.
Different brokers provide various methods for depositing and withdrawing money from your account. Select a broker that best suits your needs.
What the broker should offer
Look for these things in the brokers you’re still looking at once you’ve decided what you want and have hopefully slimmed down your list of potential salespeople.
If you’re a day trader, there’s no ‘dealing desk’, so you want to directly contact the market and not send your order to a trading desk that then executes it in the market. That takes too much time and is frequently followed by “re-quotes.” The price has changed since you placed your buy, and the broker asks if you wish to continue. Because of the time-lapse, your trade opportunity is almost certainly gone.
Make sure that you’re dealing with a licensed firm in a country with a well-established financial infrastructure. A Cyprus-regulated forex dealer, for example, is preferable to no regulation, but you may still encounter difficulties. Select a broker regulated by US, UK, Canadian, Japanese, New Zealand or Australian authorities.
Are you a day trader who wants competitive spreads? If you’re a day trader of the EUR/USD during a major session and enjoy the spread to be near one pip (point in percentage) with a non-ECN account, for example. During major sessions with an ECN account, you want the spread to be half a pip or less.
Look for a broker that is accessible to you when you need them. Create a demo account with brokers you’re considering, then send them numerous emails with queries. Keep track of how quickly and thoroughly they respond. If the client service isn’t adequate, remove that firm from your list of possibilities.
Personally test the broker
At this point, your list of potential brokers should be considerably smaller. However, with so much bogus information available, don’t rush into anything. Instead, try out the brokerage firms you’re most interested in.
- Try out a demo account and take note of the trading principles. Place your orders quickly. Spreads should be tight, with little to no variation in price across different exchanges. The platform should not crash all the time; instead, it should perform flawlessly.
- Open a live account with only a fraction of the money you want to put in. If the demonstration goes well for several weeks, consider opening a live account with a small amount of money compared to what you intend to deposit. Start by putting only $1,000 into your new account if you have $10,000 to deposit.
- Trade the live account for at least two weeks in exchange for a portion of your deposit. Continue to test customer service, asking questions and measuring how quickly they respond during this period.
- Begin withdrawing some of your cash. This may cost you several dollars, but knowing whether withdrawals are simple is essential.
