With over $6.6 trillion per day in Forex trades, deciding to partake in the action would not be a bad idea. Before you jump on this one, it’s important to know what you would need in terms of service from a forex broker for beginners.
The daily market cap is split amongst Spot, Outright forwards, Foreign exchange swaps, Currencies and Options. To get a piece of the market, one needs a broker’s portal or platform to make this possible since Forex trading requires no physical location.
With dozens of Forex brokers out there and new ones springing up, product offerings are usually very similar but with different nomenclatures.
For example, uniqueness of trading software, leverage, commission and spreads, deposits, withdrawal limits and customer service are key factors to be considered. It is important to sift the complex ones from the efficient ones to avoid headaches and disappointment down the road.
We will be considering five main areas in selecting a reputable forex broker for beginners.
Statutory Regulations Required for All Forex Brokers
In the U.S, a forex broker must be duly registered as a company and bound by the laws of the state. A reputable forex broker must also be members with the Commodity Futures Trading Commission (CFTC) as a Retail Forex Exchange dealer. Then, the FX broker must be registered with the National Futures Association (NFA) which is a regulatory body for the industry. The CFTC and NFA develop policies, rules and programs that regulate all activities of Fx brokers.
Forex Broker for Beginners – Ideal Trading Software
The Fx broker provides the platform, portal or software where all trading takes place. This point is critical to the success of any form either as a day trader or swing trader. As a rule of thumb, a good software should have an obvious “Buy” and” Sell” button usually in green and red respectively. The user interface should be clean and easy to use.
The charts need to be easy to understand with line graphs or candle sticks as clickable options. Some trading platforms have panic buttons to close all open trades. It is important you check all these before signing up with a broker. Technical and fundamental analysis tools are basics on the platform and that should be made easily accessible to the trader.
A poorly designed interface and software could lead to costly mistakes and possible loss of money. Check for these red flags before choosing a forex broker.
Forex Account Plans Ideal for Beginners
Nearly all Forex brokers have different account packages that caters to a variety of clients depending on individual needs. If one is selecting the “Basic” or “Starter” plans, it’s important to compare its offerings across many other Fx brokers starter packages.
Forex accounts can now be opened with as little as $50. This makes Forex trading very attractive to new traders and investors. With this small sum, you have a high buying power than your initial deposit, this is called leverage. Brokers offer different account plans with varying initial deposits and trading features.
Major and Exotic Currency Pairs
There are four main currency pairs gaining the most attention and liquidity in the foreign exchange market, they are the EUR/USD (Euro/U.S. Dollar), USD/JPY(U.S. Dollar/Japanese Yen), GBP/USD (British Pound/U.S. Dollar) and USD/CHF(U.S. Dollar/Swiss Franc).
Most brokers offer a wider currency pair than these, it important to go for the one that offer the pairs you’re most interested in.
For exotic currency pairs, below is a list of exotic currency pairs: USD/TRY (US Dollar/Turkish Lira), (US Dollar/Hong Kong Dollar), USD/NOK (US Dollar/Norwegian Krone), USD/DKK (US Dollar/Danish Krone) USD/ZAR (US Dollar/South African Rand) USD/HKD USD/SEK (US Dollar/Swedish Krona).
Quality Customer Service
How frustrating would it be when you get no response to your emails from an Fx customer service, or they possibly treated your request shabbily when you raised a ticket with an issue that needs urgent resolution. Poor or no response from customer service would really annoy any user and possibly lead to bad reviews and loss of money down the road.
Before you sign up with a broker, look for its review page on their website, app or social media pages. Filter out the 5-star reviews and narrow your research to the critical ones, see what users are saying.
Take out time to test chat agent’s response on live chats, you can send emails to ask about a product, plan, software e.tc. Between 1 min and 3 mins response is okay for live chats and 15 mins to 1 hour is okay for response to emails depending on the nature of query. Ensure you test customer service response before signing up.
Choosing a reputable forex broker requires guidance. Understudying the right metric to lookout for will save you tons of headaches if you know exactly what you want.
Consider these metrics when choosing a broker, these key factors will help simplify the task and narrow down your choice.
Regulation with top tier countries.
Availability in home country.
Trading platforms (MetaTrader 4 & 5, Webtrader).
Copy or social trading
Leverage and Spread on individual accounts.
Overnight negative balance protection.
Trading education and tools for technical analysis.
Payment and withdrawal procedures.
Reviews from users.
Making a choice should not be tedious, highlighting your needs will expose features you need and those you can do without. We have simplified the task by spending tons of hours reviewing the best brokers in the industry.
You can make use of our reviews in making a choice of a broker.