General features a reliable Forex broker should possess.
Forex brokers are online providers of financial trading services for the trade of various instruments that range from commodities, stocks, indices, precious metals, CFDs, and other available securities. These brokerage firms function by providing forex traders with well-defined trading platforms, trading tools and charting systems that give access to buy and sell assets in the forex market. In today’s forex trading world, there are a lot of brokers who advertise their features and expertize in form of promotion to get clients and customers to subscribe with them. In choosing a brokerage firm, they are a lot of things to consider when choosing a forex broker. Most times, extensive research is needed in other to ascertain their functionality, reliability, and transparency. The following will discuss on the features a reliable broker should possess.
See more: the best forex brokers
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Trading forex with a regulated broker is one of the most important factors in the field of trading. Proper regulation gives forex traders a certain degree of assurance where forex brokers capitalize in the affair of trading losses, keeps a trader’s fund secure by offering segregated accounts, and carries out fair financial trading dealings in such a way that trade positions are executed at prevailing market price. The only way to benefit from the above-listed protection is to choose a well-regulated broker. A system of ascertaining a broker’s regulation status is by looking at the websites of various regulated agencies/ authorities.
2. DATA AND INFORMATION SECURITY
The process of opening a trading account with a forex broker involves the submission of personal information and data. Most brokers require your passport details, utility bills and in all cases, your bank account details. Now, improper internet security and data protection can lead to disruption of forex trading activities and identity theft. Most insecure brokers encounter daily hackers which lead to unauthorized money transfer and attack.
3. FINANCIAL ASSET COVERAGE
The forex market creates a scenario where forex traders can engage in the trade of more than one financial asset with respective forex brokers. When choosing a forex broker, it is advisable to go for innovative forex brokers who provide access to trade a wide variety of financial instruments like stocks, currencies, precious metals, indices, bonds, CFDs, ETFs, cryptocurrencies and index options through a single trading account. Reliable forex brokers should have an in-depth coverage of products on the different capital market.
4. TRADING PLATFORMS
Forex trading is carried out through trading platforms. Brokers should be able to provide user-friendly and beginner-friendly trading platform with sophisticated software designed to deliver an easy and exiting trading scenario in the world of forex. Available trading platforms should include every parameter required to meet all trading needs. In other to ascertain the functionality of these trading platforms, traders can take it for a ride by engaging in a demo trade. A reliable trading platform should be able to analyze the forex market perfectly, include trading tools, trading signals, and be able to execute orders within seconds.
Examples of trading platforms to look out for when choosing a broker includes MetaTrader 4 with a multi-terminal feature, web-based trading platform that gives forex traders the ability to trade forex from any reliable browser, mobile trading platform that enables traders to trade anywhere and at any time using android phones, and a social trading platform that enables traders to copy the trade strategies and forex signals of more experience forex traders thereby making better trade decisions.
5. TRADING STYLE AND SYSTEM
Every forex trade is based on a specific trading style, system, and strategy used to achieve success. While choosing a forex broker, it is important that you work with the firm that best meets your trading style and needs. For example, if you are a short-term trader who makes profits in the forex market by engaging in trades by scalp methods, you would want to make sure that the brokers you work with offers scalping in its financial service features, offers extremely low spread, and provides access to deep liquidity of forex interbank market.
Similarly, if you are a long-term trader with a high interest on big moves in an instrument’s exchange rate, your concern might be attributed to spreads and trade execution speeds but you might want to subscribe to a brokerage firm that offers an overnight interest rate. With this, having basic information on overnight rates and policies will be very important before choosing a broker.
If you are a trader who finds it difficult in carrying out personal forex market analysis and making major decisions when it comes to trading forex, you might want to subscribe to brokers who include automated trading platforms to their trading package. These platforms have the ability to selflessly carry out market analysis and trade orders automatically based on a set of algorithms, rules, and guidelines.
6. SPREADS, COMMISSIONS, FEES
In forex trading, the actual cost of trading has a very important role to play on profitability. Although the difference between a few pips might not make much difference, there is an accumulation that takes place overnight. There is a great difference between choosing less expensive and actually expensive brokers. When dealing with low-cost forex brokers, you get trade-offs while more expensive brokers offer more trading tools, research, market analysis, effective customer services, education/training services, and charting systems.
When choosing a broker, it is advised to go for brokers who offer tighter spreads since the tighter the spread, the less costly it is for a trader or an investor to enter or exit a trade position. In addition, check the commission charges per broker. Some do not charge commissions on most trading accounts while others charge five dollars per lot for zero spread trading accounts.
In forex trading, choosing the right forex broker is a vital step to achieving success while trading instruments in the forex market. It comprises of extensive research in other to identify and work with reliable and transparent brokers who offer adequate customers care services, educational forex trading materials and training, being effectively regulated, offers functional trading platforms/tools and provides security of funds, data, and information at all cost.