Forex trading is lucrative but requires working with the right broker and using the best forex trading platform. You need the broker to buy and sell forex on your behalf while taking a commission. Finding the right one is not a walk in the park.

Fortunately, we’re going to reveal the secrets to choosing the right broker.

Who Is a Forex Broker?

Before diving into how to find the right broker, you must first understand what he does. The forex market is decentralized, with no single exchange for all transactions. It relies on an interbank system, a global network where institutions trade foreign currency.

Regular forex traders must use a broker to enter the network. A broker is an individual who allows traders to trade in currency pairs. Brokers also offer services, including leveraged trading and profit from the spread, the difference between the buying and selling price, and commission.

Secrets to Choosing the Right Broker

If you’ve been wondering how to choose the best broker, here are some handy tips:

Mind Transaction Costs

When picking a broker, you must first consider the transaction costs. The cutthroat competition allows working with brokers worldwide without spending much. Some of the costs involved include:

Spread: The cost incorporated into the bid and ask price for each currency pair during a trade. The price quote for each currency pair includes a slight difference between the buy and sell prices. Changes in the spread are determined by small movements in price, known as pips.

Commission: Brokers charge a fee for each transaction known as a commission. This may be a percentage of the trade value paid by the party who initiates the trade of both parties. When picking a broker, you must keep the commission in mind since it impacts your profitability on the best forex trading platform.

Swap rate: These are currency interest rate differentials during a trade. You must consider the swap rate when holding and opening positions overnight. The rate can be positive or negative depending on the currency pair and duration.

Follow these simple steps to find the swap rate on MetaTrader 4

• Click ‘View’ on the top menu
• Select ‘Symbols’
• Choose the currency pair whose swaps you want to see and click ‘Properties.’
• A pop-up menu will show the swap rates

Check the Type of Broker

When picking the broker to use, you must consider their type to understand how they operate. Examples of broker types are:

Market Makers

Also known as a B-book broker, a market maker gives customers a two-sided market according to a professional trader opening on the broker’s in-house dealing desk. When the price is dealt with, the market maker takes the other side of the transaction by the client. This is through buying on their bid side or selling on the offer side of the quoted price. The broker aims at capturing a portion of the spread. Achieving this requires an appropriate volume on each market side to avoid laying off the accumulated risk by a counterparty.

When the executed trade is large enough, it may offset the trade immediately, especially when they speculate the market to move against it. Another alternative is to add it in their trade book depending on market outlook and transaction size.

No Dealing Desk Brokers

Brokers who use the No Dealing Desk (NDD) model don’t have a table for their operations. They also don’t intervene in order execution and send buy and sell orders directly to the market through liquidity providers.

These brokers work to bridge the gap between two market participants after matching two opposite trades. The best forex trading platform will have live quotes from global banks. With an NDD model, the price when you click is final.

Electronic Communication Network (ECN) Broker

The ECN offers an electronic system from which buyers and sellers can execute trades. This system allows access to information about orders entered. The system assists in executing these orders. ECN matches buy and sell orders

An ECN broker doesn’t pass order flow to market makers but matches participants in a trade electronically before forwarding the order to liquidity providers. These forex brokers charge lower fees and are available for the additional trading time.

Their Speed of Execution and Slippage

You need a broker with fast execution and minimized slippage in the highly volatile forex market. Slippage is the difference between the expected price after placing an order and the actual price for order execution.

Only a fast broker can reduce the chances of regular slippage. Fast brokers use fiber optic cables to connect to bigger liquidity providers.

Platform They Use and User Interface

Whether focusing on social trading or developing complex strategies, you need a broker with a platform that offers market access. The best forex trading platform must also have appropriate trading tools to achieve your investment goals.

The ideal broker must have a reliable platform from a third party having an established community of traders and multiple trading tools. You should also consider the appropriate device for the platform.

Advanced traders look forward to using the best forex trading platform with advanced features such as auto trade feature. New traders find simple software for mobile devices. The trader may also have a web trader platform accessible through any browser.

Most brokers offer access to MT4, but they may complement it with other tools and resources, including:

• Tools for automated technical analysis 
• Market analysis, insights, and sentiment tools
• Copy trading app to mimic the performance of pro traders 

Possession of a License and Compliance With Regulations

Regulations in the financial market vary by jurisdiction. Before choosing a broker, consider the investor protection they offer. The best forex trading platform is regulated by leading financial authorities in the industry to avoid scams.

A licensed and registered broker gives assurance that all operations follow appropriate standards. It’s an assurance that the regulatory body will come in to resolve a conflict between you and the broker.

Brokers who operate in multiple jurisdictions have corresponding regulations, including

• Financial Conduct Authority, the United Kingdom
• Federal Financial Supervisory Authority, Germany
• Australian Securities and Investments Commission, Australia
• Financial Markets Authority, New Zealand
• Monetary Authority of Singapore, Singapore

You can check whether the broker is regulated by checking their website footer. The best forex trading platform will have regulatory information, including logos of organizations they subscribe to. Alternatively, you can check the regulator’s website to see whether the broker is listed there.

Available Tools for Risk Management

You should choose a broker with various risk management tools for protection against volatility. Some of these include:

Demo Account

Using the demo version of a platform allows one to discover how to use the interface. A demo account allows for testing trading strategies and getting familiar with the best forex trading platform before opening an account.

Practising strategies and testing trading robots using real-time market data using a demo account limits risks in the industry. Some brokers allow unlimited access and virtual trading balances, while others have time restrictions.

Order Type

Sometimes, order types minimize losses during the price movement of currency pairs not in your favour. Most brokers and platforms offer standard order types, including stop-loss orders and market orders. Consider getting one offering Guaranteed Stop Loss Orders (GSLOs).

Brokers may allow traders with premium accounts to place (GSLOs), guaranteeing to close a trade at the trader’s recommended price regardless of market conditions.

Checking the risk management tools available on the best forex trading platform is very important when choosing a broker.

Access to Customer Support

Anything can go wrong in the forex market, so you should be able to reach your broker quickly and easily. Before you begin working with them, find out their operation hours. Do they offer 8/5 or 24/7 support?

What are their customer service options? Do they have email, live chat, or phone support? Your ideal broker must be reachable and accountable to resolve any issues you may have fairly quickly.

Some locations require multi-lingual support. Ensure that the best forex trading platform supports your language.

The broker may also have the appropriate information to answer any queries you may be having on their site. These may include:

• Tutorials
• Detailed FAQs
• E-books
• Webinars
• Blog

What Is the Funding Policy?

Brokers have different policies regarding minimum deposit, deposit, and withdrawal methods. Remember to check any applicable fees before any transaction.

Minimum Deposit

Brokers require customers to deposit on the best forex trading platform before trading. Although some don’t have a minimum deposit, check the required amount from others. Some may have a very high limit that keeps some traders away from their platform.

Funding Method

You should also consider the available methods for depositing and withdrawing from the best forex trading platform. The ideal broker should have various funding methods, including those you’re familiar with.

Some of the common deposit and withdrawal methods include:

• Neteller
• Bitcoin wallets
• Skrill
• PayPal
• MasterCard
• Visa
• Bank transfer

Transaction Fees

Brokers usually charge a fee for depositing and withdrawing. The transaction fee varies by broker. Some may allow free unlimited withdrawals, one free withdrawal monthly, or charge for each transaction.

There’s always a fee schedule on the best forex trading platform to know what you’re to spend before any transaction.

Forex Promotions and Bonuses Available

In the cutthroat competition, brokers offer bonuses to entice traders to use their platforms. Bonuses allow growing your trading capital, although they come with strings attached. Remember that bonuses are not available in some jurisdictions.

Generally speaking, a forex deposit bonus is a type of promotion offered by forex brokers to new or existing clients. It is a way for the broker to incentivize traders to make a deposit and have their account with a larger trading volume. The bonus is usually a percentage of the deposit amount and is added to the trader’s account balance. For example, if a broker offers a 50% deposit bonus and a trader deposits $100, the broker will add an additional $50 to the trader’s account balance.

Bottom line, the bonuses are made so traders can enjoy a larger trading account and therefore potential profit, having said that each trader should keep in mind that usually, forex bonuses have terms and conditions associated with a forex deposit bonus, such as a minimum deposit requirement or a minimum trading volume requirement.

It is important for traders to make sure they read and understand these terms and conditions before accepting a deposit bonus. Some brokers may also require traders to opt-in to the bonus offer in order to receive it.

Again, it is very important to emphasize the fact that forex deposit bonuses are not available in all countries and may be subject to regulatory restrictions. Traders should check with their broker and local regulatory authorities to determine whether deposit bonuses are available in their country.

Here are bonuses you may find on the best forex trading platform:

Welcome Bonus

This broker’s promotion gives new customers a particular amount to grow their trading balance. The bonus is credited to your account after making the first deposit on the best forex trading platform.

You can use it to test out the platform’s services without risking much. Brokers use this bonus to reward traders for choosing them over others.

Fixed Deposit Bonus

Customers must deposit a given amount into their accounts to qualify for this bonus. It’s available to new and existing customers if you make an initial or subsequent deposit. This bonus is usually a percentage of the fixed deposit amount to make on the best forex trading platform and varies by broker.

No Deposit Bonus

You get this bonus from the broker without having to fund your account on the best forex trading platform. It’s a reward to allow you to make your first trades without investing or risking anything. When you lose, you don’t part with any amount, and you don’t owe the broker anything. You get your earnings after winning without paying the trader for the money you traded.

Reload Bonus

Regular customers can get the reload bonus from a broker for funding their accounts again. The bonus is an incentive for traders to make subsequent deposits on the best forex trading platform,

These bonuses are not very significant and may come with steeper redemption requirements. It’s an instant and may be about 50% of your deposit. However, it’s more beneficial to regular traders.

Pending Forex Bonus

Traders who reach a particular milestone on the best forex trading platform can claim the pending bonus. You can’t use the bonus before performing the task. It remains pending until you clear the task required by the broker.

New customers may have to make several trades before claiming this bonus. Check the bonus terms and conditions since it may have a timeframe to reach the milestone.

Account Types Available

You need an account to begin trading on the best forex trading platform. When picking a broker, you must determine the accounts available. The ideal account depends on risk tolerance, the initial investment required, and the time for your daily trading activities.

Here are the types of accounts in forex trading

Standard Account

Traders access standard lots of currency, each valued at $100,000. However, it’s not the investment you should make before trading. Rules and leverage rules stipulate that that amount is the margin to trade a standard lot.

Standard accounts require upfront investment to trade full lots, making brokers offer investors more perks and services. Each pit is worth $10, and if a position moves by 100 pips, a trader earns $1,000.

Mini Account

Holders of this account trade mini lots, each valued at $10,000. Brokers who offer standard accounts offer mini-accounts. This entices traders unwilling to trade full lots because of the high initial investment.

Mini accounts have low risk because trading in $10,000 increments limits novice traders from blowing their investment. New customers can also test different strategies without risking a lot. You can open a mini account for about $250 with a leverage of up to 400:1. You minimize risk by switching from a standard lotto six mini lots.

Managed Accounts

Holders of managed accounts own the capital but don’t make buying or selling decisions. An account manager handles all operations after you set profit goals and risk management strategies. The manager will work to meet your objectives.

Owning this account allows getting professional guidance from an experienced forex broker. You can also diversify your portfolio as the manager takes care of everything. However, this account requires an investment of about $10,000 for individuals and $2,000 for pooled accounts.

Mind Their Reputation

Investing in forex trading requires working with a well-reputed broker to minimize risk. The industry is highly volatile regardless of the potential benefits. When selecting a broker, choose one with a great reputation.

You can determine the broker’s reputation by reading reviews and testimonials from people who have worked with them. Alternatively, you can ask yourself questions, including

• Have they won any industry awards?
• How many years have they spent in the industry?
• What is their success rate?
• Do they trade in other markets, such as online metal trading?

Getting answers to those questions will make finding the right broker seamless.

What Other Markets Do They Trade In?

The final consideration when choosing a broker is the markets they trade in. working with a trader with experience in various markets encourages diversification. You won’t have to move to another broker who trades in other markets.

Whether you want to trade futures, trade shares, or buy and invest in gold, find a broker who operates in all those markets. The broker may also have experience in commodity trading if you want to widen your investment scope.

Conclusion

You must know about brokers when considering joining the lucrative forex market. These people offer traders access to platforms to buy and sell foreign exchange. Choosing the best one requires knowledge about bonuses, industry reputation, available accounts, and transaction costs.

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