How To Choose A Reliable Forex Broker?
Financial security is the cornerstone of our well-being, as it allows us to feel free in the fully commercialized world. However, with all the economic instabilities, it is difficult to save money and preserve its value. Instead of just trying to accumulate as much money as possible, it is worth learning new ways of making a profit, like Forex Trade, where traders earn by speculating on the world’s financial inconsistency.
Let’s discover more about Forex and the ways to join its world.
What is Forex?
Forex is a currency exchange. In local terms, it is an exchange of money while traveling, or purchasing goods from foreign vendors; yet when considered globally, it’s an all-encompassing market, where the currencies are traded 24 hours a day, 5 days a week, non-stop.
The Forex market is decentralized, thus, there is no central regulatory body; it is based on interbank networking, where the currencies are traded between financial institutions of different kinds – central and commercial banks, corporations, trading firms, hedge funds, forex brokers, etc.
Retail traders, like our readers, can participate in currency trades with the help of a forex broker – an intermediary party, so to speak. Brokers enable the trade activities between the market and a retail participant, making money on the spread (the difference between the buy and sell price), and a number of fees.
How to choose a reliable Forex broker?
The global pool of brokers has no shortage of options, yet choosing a reliable one is rather a challenge. It is important to draw the list of possible candidates, compare all the key characteristics, and at the end, make a decision.
All trades are performed through specialized platforms, like MetaTrader 4 (MT4) and Metatrader 5 (MT5). With MT4 being a staple in the Forex world, MT5 offers more instruments and market extensions including stocks, indices, commodities, and cryptocurrencies. Besides, metatrader 5 for pc and for mobile view have equally developed functionality, allowing its users to do the trading any time they need.
The functionality of the platform can be enhanced by the usage of other instruments like AI analytics, insights, and sentiment analysis, which maximizes the chances for successful trades.
One of the most important questions is related to the cost of broker’s services, what do they make money from?
Spreads – a primary source of income. A spread is the difference between the sell and buy price. If the EUR/USD is 1.07542/44, the difference (2 pips) is the cost that the trader is required to pay for each transaction. Thus, the lower the spread, the better.
Commission – there is no single approach to charging money and its amount. Some brokers may increase the spreads, lowering other fees; while others may offer the minimal spread, yet charge more with commission. The choice depends on the trading style and preferences of every client.
Swaps – should be considered by the traders who keep the currency positions open overnight, they either pay the interest or earn, depending on the swap rates and duration.
Initially, the forex trade was only dedicated to currency exchange, yet nowadays, it has a wider market of assets to consider.
While searching through the broker’s website, the traders might also notice other assets like commodities (typically, energy-related substances and agriculture products), shares, cryptocurrencies, and indices (performance of a group of companies, or currencies); all of them have a different formation of abbreviations.
The better the choice of the trading assets, the more pluses should be added to the broker’s profile.
The traders can safely participate in trades only when they understand that their rights are protected, and there is a regulator to contact in case of issues.
As a rule, brokers offer their services globally, thus, they should be licensed with the appropriate authoritative bodies. The most impactful authorities are the Financial Conduct Authority (FCA) in the United Kingdom, the Australian Securities and Investments Commission (ASIC) in Australia, the Financial Markets Authority (FMA) in New Zealand, the Monetary Authority of Singapore (MSA) in Singapore, and other local regulators.
Customer support and responsiveness is one of the key features of a reliable broker. The support is expected to resolve all the issues within short periods once they arise. As a rule, there are a few channels for communication that should work non-stop.
Reviews and testimonials complement the overall vision of the platform and verify if the services the broker offers match the expectations. It is also important to read between the lines and avoid overly positive and negative reviews, as they usually are sponsored.
The bottom line
Forex trade is one of the best ways to make your money work for you, as it lets traders make a decent living by speculating about the financial market instabilities.
If you are willing to join the currency trade world — research the brokers, analyze their offers, and start your way into the trade and financial security.
