WHAT YOU NEED TO KNOW WHEN SELECTING BROKERS
FOREX BROKER DEFINITION
A FOREX BROKER IS A FINANCIAL SERVICES COMPANY THAT PROVIDES TRADERS ACCESS TO A PLATFORM FOR BUYING AND SELLING FOREIGN CURRENCIES. TRANSACTIONS IN THE FOREX MARKET ARE ALWAYS BETWEEN A PAIR OF TWO DIFFERENT CURRENCIES. A FOREX BROKER MAY ALSO KNOWN BE AS A RETAIL FOREX BROKER OR A CURRENCY TRADING BROKER. THERE ARE TWO MAIN TYPES OF FOREIGN EXCHANGE BROKER. THERE ARE THOSE WHO PROVIDE A TRADING PLATFORM TO FOREX SPECULATORS – NORMALLY CALLED CURRENCY TRADING BROKERS OR RETAIL FOREX BROKERS. SPECULATORS TRADE CURRENCIES THROUGH FX BROKERS IN ORDER TO TRY TO MAKE MONEY BY BUYING AND SELLING CERTAIN CURRENCIES. THE SECOND TYPE OF BROKER SERVES REAL-ECONOMY CLIENTS WHO NEED TO EXCHANGE CURRENCIES IN ORDER TO CARRY OUT BUSINESS IN MORE THAN ONE CURRENCY.
FEATURES OF A GOOD BROKER
CHOOSING WHICH FOREX BROKER TO TRADE WITH CAN BE A VERY OVERWHELMING TASK ESPECIALLY IF YOU DON’T KNOW WHAT YOU SHOULD BE LOOKING FOR. BGAFX RECOMMENDS 6 CRUCIAL THINGS TO CONSIDER WHEN CHOOSING A FOREX BROKER.
Ease of Deposits and Withdrawals
Good Forex brokers will allow you to deposit funds and withdraw your earnings hassle-free. Brokers really have no reason to make it hard for you to withdraw your profits because the only reason they hold your funds is to facilitate trading. Your broker only holds your money to make trading easier so there is no reason for you to have a hard time getting the profits you have earned. Your broker should make sure that the withdrawal process is speedy and smooth.
Every single time you enter a trade, you will have to pay for either the spread or a commission so it is only natural to look for the most affordable and cheapest rates. Make sure you know if you need tight spreads for your type of trading, and then review your available options. It’s all about finding the correct balance between security and low transaction costs.
In online forex trading, most trading activity happens through the brokers’ trading platform. This means that the trading platform of your broker must be user-friendly and stable. When looking for a broker, always check what its trading platform has to offer. Does it offer free news feed? How about easy-to-use technical and charting tools? Does it present you with all the information you will need to trade properly?
When a broker starts to hinder the withdrawal of your funds, offering to send additional documents or scan of credit card, this is direct evidence that it is not a reliable brokers. Of course, you need to keep in mind that verification of your documents is a prerequisite for any reliable broker. But when the verification has already been passed, and the broker requires all new and new documents, then it is just an excuse for you not to pay your hard-earned money.
The first and foremost characteristic that a good broker must have is a high level of security. After all, you’re not going to hand over thousands of dollars to a person who simply claims he’s legit, right? Fortunately, checking the credibility of a Forex broker isn’t very hard. There are regulatory agencies all over the world that separate the trustworthy from the fraudulent.
Currency Pairs Offered
While there are a great deal of currencies available for trading, only a few get the majority of the attention, and therefore, trade with the greatest liquidity. The “majors” are the U.S. dollar/Japanese yen (USD/JPY), the Euro/U.S. dollar (EUR/USD), the U.S. dollar/Swiss franc (USD/CHF) and the British pound/U.S. dollar (GBP/USD). A broker may offer a huge selection of forex pairs, but what is most important is that the broker offers the pair(s) in which the trader or investor is interested