Choosing a Forex Broker
Forex Brokers: What to Look For
Trades
While volume investors fuel the majority of the $4 trillion dollar per
day foreign exchange market, increasingly opportunities are opening up
to lower-volume investors. In the past, minimum deposits were in the
thousands; now you can fund a new account with as little as $100. This
low deposit requirement gives you the opportunity to test out a few
services without having to risk large sums of money. Most forex trading
brokers also require only a 1,000 minimum trade lot size. If you are
trading from the U.S., leverage is limited to 50:1; however, if you are
trading from other countries, you may be able to leverage as much as
400:1. In terms of trading pairs, brokerages offer a choice of 30 to
more than 60 trading pairs. While you may not choose to trade more than
60 trading pairs, you will want to verify the trading pairs available to
ensure that the ones you are interested in are accessible through your
selected broker.
Brokerage & Funding Options
Before selecting a new broker, you should consider the broker's
reputation, funding and payment options, and all associated fees and
interest. While conducting our research, we noticed that withdrawing
money seems to be trickier than depositing money into your account. Keep
in mind that it may take days or longer to retrieve your funds, so you
should not trade with money that you actually need. It would be prudent
to investigate customers' experiences with withdrawals before signing up
with a new broker. Also, be careful to note what type of broker they
are and what governing agencies the broker is regulated and licensed by.
If you are a day trader, you may not have to worry about interest rates. However, if you hold a position overnight, the broker will charge you interest. For Muslims, most offer interest-free accounts that charge a fee rather than interest. Other fees to consider include wire-transfer fees, margin rates and routing fees.
Trading Platforms
Most forex brokers offer MetaTrader to their clients as the trading
platform. If you are an experienced trader, you are likely already
accustomed to using this popular trading platform. Those that offer
MetaTrader also provide access to the mobile version. All platforms are
now web-based, and many brokers offer their own proprietary trading
platforms as well. If you are trading with a market maker broker, it is
recommended that you monitor a few trading platforms to ensure that they
are offering you fair deals.
Help & Support
Although nothing can replace extensive research and experience with a
broker over an extended period, we did compare how easy it is to contact
the forex brokers and what kind of education they provide. The best
forex brokers offer telephone and email support during generous business
hours. Many also provide limited chat support. All services provide
free demo accounts so that you can practice trading strategies and using
the trading platform.
Forex trading involves a high amount of risk, so we recommend that you educate yourself as much as possible before you start. The top brokerage services provide documentation, videos and tutorials to help you learn how to minimize your risk.
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