Finding a good Forex broker is very important.
It is a critical part of being a successful trader, because if you cannot rely on your broker, it does not matter how good your trades are.
One thing that is very important when it comes to brokers is their overall reputation. Brokers take a lot of heat from a lot of people. Many people will blame brokers for losing their money, when in reality it was just poor trading. With all the heat put on brokers, it is hard to maintain a good reputation for a decent amount of time, so if a broker does maintain that reputation, that is a good sign that they are really doing a good job with their brokerage.
The reputation that a brokerage has should include a few major things.
First, it should include how long it has been around. If the reputation only goes back 6 months, you may want to wait and give them a little more time to prove themselves before investing your money with them. Brokers that have multiple years of solid reputation is what you are looking for. If they have a large client base and overall positive reviews, that is a great first step to believing you can work with them.
The brokers reputation should include their execution. If a broker has been around for a while, there should be some good information on how their execution is. Execution is a huge part of how good a broker is because everything comes down to how trades are executed for you. If the platform is constantly giving you re-quotes on price or delaying your entries for a significant amount of time, it is going to cost you in the long run. You want to avoid locking yourself into a broker that does not have smooth, fast execution. When you look at reviews for brokers, make sure you pay attention to how people describe their execution, this is definitely something you will not want to worry about when trading Forex.
Another thing that is very important, when it comes to choosing a Forex Broker is the customer service. How the brokerage treats their clients is probably the most essential thing about them. If you are trading for a long time, their will be many times where you need to get in contact with the brokerage you are trading with. It is vital that you are able to communicate quickly and easily with them, and that they are very responsive to you. There are many things that could happen that would require you to contact the brokerage. For instance, you may see a discrepancy in your statement and need to verify the situation. You may be hit with commission or swap charge that does not make sense to you. You may be margin called when it does not seem that it should be so. You may have trouble executing a trade, moving a stop loss or limit or exiting a trade altogether. There are a lot of things that can happen while trading; and considering that almost all of them will have a direct affect on your hard-earned money, it is very, very important that you have good communication with your brokerage. Besides, you are investing with them, and they are making money from your trading, the least they can do is provide good communication for you.
You should also look into how deposits and withdrawals work with the particular brokerage you are thinking about investing with. Make sure that they have convenient (according to what is convenient for you) ways to make deposits and withdrawals. Make sure there are no fees when depositing money or taking it out. Make sure that they do not have limits that don’t work for you when it comes to depositing or withdrawing. Many brokers will have a minimum and a maximum deposit amount and withdrawal amount. If these amounts do not work for you, make sure that you do not invest with that particular broker. Check into the amount of time it takes to make a deposit or a withdrawal. If it takes weeks to get one or the other done, that is a very negative thing. Many brokers can do it within the business day or the next day in a worst case scenario. This is very important, because as human beings, you never know when you will need money for an emergency, and it is crucial that you can get to it when you do need it. Be very investigative about this matter when it comes to brokers. You want to know exactly how the process of making deposits or withdrawals works before every investing any money. If you see reviews about people having trouble getting their money from a broke, stay away from that brokerage. The worst thing that could happen, as an investor, is to put money into an account with the plan to earn a return on your investment, and then never be able to get that money back. I cannot stress enough how important it is to look into the deposit and withdrawal process of the particular broker you are considering for your trading.
You should always look into the spreads the broker offers. Spreads are another crucial part of your trading. Often times, it is the spread that will make or break you. If a broker is offering too high of spreads for you comfort level, DO NOT choose to trade with them, even if everything else seems to be good. A spread can drastically impact your profitability as a trader. If one broker is offering 1.5 pips on the EUR/USD while another is offering 2.8, the former broker has a HUGE advantage for your profitability. One pip in difference can mean a large, large amount of money for you in the long run. It is important to compare spreads amongst many brokers to see who has the best spreads available; and do not take the broker at their word as to what they say their spreads are. Look up reviews and find out what real traders who are using that broker say their spreads are-that will give you a much better idea of what you will actually be trading with. You should also check the spreads on multiple pairs. Just because a broker has the best spread on EUR/USD does not mean they have the best spread on everything else. Think about what pairs you will be trading most often, and then find out what each brokers spreads are on all of those pairs. Then average out who really offers you the best spread for what you will be trading.
Speaking of pairs, make sure that you look into what pairs the broker offers. Different brokers offer very different pairs. Sometimes it is like night and day in terms of the amount of pairs different brokers are offering you. If there are some exotic pairs you like to trade, BE SURE that the broker offers that pair, and look into the spread to make sure that you can continue to trade it. You also need to be sure that they don’t just have it on demo accounts. Sometimes a broker will offer a pair on demo, but it is nowhere to be found when you begin your real account. You want to avoid getting caught in that trap.
Another thing you may want to check out is bonuses. Often times, brokers will offer a percentage bonus to your initial deposit. Assuming that the broker lives up to all of the major expectations, it would be worthwhile to take advantage of a deposit bonus. If they are not offering a bonus, you could send them an email and ask them if they would consider giving you a bonus. They may not agree to it, but it is always worth a try.
Lastly, you should always trade the brokers demo account for a while before going live. It is important to have a feel for how the platform works before putting real money on the line. Remember that, in Forex, a simple mistake like entering the wrong trade size can cost you dearly, so you want to make sure you have control over the trading platform.