How to Choose the Best Forex Broker

If you are a trader in the forex market, there are many forex brokers available to choose from. Forex brokers are available online through websites and attract traders who want to trade forex with leverage.

The global forex market is the largest and most actively traded financial market in the world with a daily volume of $6.6 trillion. Online forex trading involves the speculation of the price movements of currency pairs in the forex market.

Both beginners and experienced traders generally look for certain features when looking for the best online forex broker.

Read on to find out what you need to consider when choosing the best forex broker.

Choosing the best forex broker: What you need to know

Some of the most important things to consider when choosing a forex broker include the trading account features such as leverage and margin and fees charged by the broker, the currency pairs offered, trading platforms and customer support.

Account features

Each forex trading broker has different account offerings with some important features that you need to consider when comparing brokers. These include leverage and margin, fees, and initial deposit requirements.

Leverage and margin

Depending on the forex trading broker, you may have access to leverage. Leverage allows you to control a large position with a small deposit. For example, leverage of 1:100 means that you can hold a position of $100,000 with a deposit of $1,000. However, leverage is a double-edged sword - even though there is the potential for higher profits, there is also the risk of losing all your funds.

Fees

A broker that charges commissions may charge a specified percentage of the spread (the difference between the bid and ask prices of a forex pair). Many online forex brokers charge no commission but have wider spreads. The wider the spread, the harder it can be to make a profit. Popular trading pairs such as the EUR/USD and GBP/USD have tighter spreads.

It’s important to do your research to find out how brokers make their money and look around for the best forex broker that is suitable for you.

Initial deposit requirements

Most forex accounts can be funded with a very small initial deposit as low as $50. With leverage, the buying power is much greater than the minimum deposit which is one reason forex trading is so appealing to new traders. Many forex brokers offer standard, mini and micro accounts with different initial deposit requirements.

Currency pairs offered

There are many currencies available for trading, but there are only a handful of currencies that are traded actively in the forex market. As well as the EUR/USD and GBP/USD pairs, the major pairs also include USD/JPY and USD/CHF.

A broker may offer a wide selection of forex pairs, but it’s most important that they offer the pairs which interest you as a trader.

Customer support

Forex trading takes place 24 hours a day, so a broker's customer support should be available 24/5. Getting in touch with your broker should be easy. Many forex brokers offer 24/5 customer support and common communication methods include email, phone and live chat. Online live chats are becoming more popular as you can instantly connect with customer service representatives and have your questions answered.The best online forex brokers should also provide multilingual customer support.

Trading platform

It is important that a forex broker offers a good trading platform with a lot of educational resources since the trading platform is the trader's portal to the markets. You should make sure a broker's platform and software provide the technical and fundamental analysis tools you need, and that trades can be entered and exited easily. Many online forex brokers offer their own in-house trading platforms or provide access to 3rd party forex trading platforms like MetaQuotes’ MetaTrader 4 and 5.

To decide on the best forex broker, you can open a demo account with any broker you prefer and explore what they have to offer. Most brokers offer free demo accounts so that traders can try out the trading platform before opening and funding an account.

Final thoughts

To be successful in trading, you need to choose a good CFD forex broker. A reputable and reliable broker will provide all the help and support you will need. This is why it is important to open a demo account and explore online forex brokers that fit your criteria.

You can open a demo account with a reliable broker like IronFX and test your strategies before you use real money. If you have confidence in your forex broker, you will be able to commit more time and attention to analysis and developing forex strategies. It’s essential to do some research before committing to a forex broker as this can increase your chances of success in the competitive forex market.

DISCLAIMER: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication