There is a lot to be said about how to choose the best forex broker, although there is only so much that people who are new to forex trading would find truly useful. Forex, as people already know, offers an incalculable number of business opportunities to both rookies and professionals alike, but not everyone gets to be the best. Having the best forex broker, however, is not impossible – in fact, it can be quite easy.
Why do you need the best forex broker?
Forex markets are as challenging as they are profitable. With trillions of dollars changing hands day after day after day, it can be hard to stay focused on the task at hand. It can be intimidating, but having the best forex broker at your side may just be what tips the scales in your favor. While it is true that even the best forex broker will not win this struggle for you, it is just as accurate to say that you will not be able to win without them – the best forex broker, that is. In fact, finding the one is critical to your success as a forex trader.
Can Choose-Forex help you find the best forex broker?
Of course, but only as long as we all understand a few things beforehand. First of all, forex trading is an implications based business, which means many of the transactions are based on reference and implications. The former relates to the previous experience and performance of currency pairs, while the latter is all about results. In other words, reference deals with past performance of a currency pair, whereas implications deal with the future results. Those are usually quite unpredictable, given the sheer number of factors that need to be taken into account, but this is hardly a challenge for the best forex brokers.
Is there anything of note when considering which one is the best forex broker?
Apart from the instinct, there are numerous things to be considered when choosing your broker.
The most important thing to understand is that you are not searching for the best forex broker; you are trying to figure out which forex broker is the best for you. The best forex broker is the one you can trust with your finances as well as your business decisions. Apart from that, the best forex broker needs to live up to a list of standards that you have to figure out, and soon. But don’t worry, you don’t need to do this on your own. Ultimately, choosing the best forex broker will be your decision, as it should be, but here are some of things you might want to keep in mind when making the decision.
Choosing the Best Forex Broker – Chapter 1: Commission and Spreads
Even the best forex broker needs to make a living – but this does not mean they have to do it at your expense. Paying commission may have been an acceptable practice at one point, but that point is long gone. In other words, very few forex brokers charge an actual commission these days. Most make their living on spreads alone, which seems more honest when you think about it. In fact, you might be hard-pressed to find a forex broker that still charges commissions and fees, considering most of them have either adapted to the new business climate or closed shop a long time ago.
Spreads, however, can make all the difference – pun intended. The difference between the ask and the bid price is what most forex brokers turn to when making money for themselves, and even the best forex broker will likely be no exception. However, some spreads are tighter than others and when looking for the best forex broker, keep one thing in mind: the tighter (the spreads), the better. Some brokers prefer fixed spreads, others offer floating spreads while most brokers feature both. The best forex broker will offer low spreads, and usually 2 pips is about as low as they go, so this should serve as a guideline. Of course, the more exotic the currency pair, the larger the spread, but when it comes to major currency pairs, 2 or 3 pips should be the mark of the best forex brokers.
On the other hand, if your idea of the best forex broker involves exotic, unpredictable and volatile currencies, then spreads will be the least of your problems. It all comes down to whether your idea of the best forex broker involves a huge selection of currency pairs, the best profit opportunities or something in between. In any case, spreads will be of utmost importance, as they will determine how much money will go to your best forex broker. This will not merely determine your profit margin; it will decide if such a thing will even exist. If the spreads are too big, even if you win, you will lose.
Choosing the Best Forex Broker – Chapter 2: Transparency
Although it demands a certain degree of trust, such things have to be earned. This is why the best forex broker needs to be fully transparent and on the level with you at all times. All of the obligations, payments, commitments and other issues have to be known in advance and agreed upon. If a broker gives you a nasty surprise or the deals have to be changed all the time, then this is definitively not the best forex broker for you. They need to be reliable, honest and most importantly, legit. Any fees, transactions etc. need to be agreed upon at once. And for pity’s sake, read the small letters as well. Even the best forex trader will probably have them, and for a reason. There should be no misunderstandings between you and them, but should they occur, they need to be resolved quickly and efficiently, because this is what the best forex brokers do. Also, make sure they are who they claim they are. Legitimate brokers are more common nowadays than frauds, but the latter are still around. The best forex broker will probably do a background check on you anyway, so there is no reason not to return the favor. If this is not possible for some reason, well that also means something, does it not?
Choosing the Best Forex Broker – Chapter 3: Demo account
Even though this part is purely optional, especially for experienced traders, many of the best forex brokers offer a demo account. These are important for both experienced traders and rookies alike, especially for the latter. This is because it gives them an insight into not only forex itself, but it also tells them a thing or two about the broker in question. After all, the purpose is to prepare and train people to make use of the real trading platform, so the best forex broker should include a realistic and free demo account into their offer. There are all sorts of brokers out there and all sorts of demo accounts, although most of them are either limited to a period of time (usually two to four weeks) or are more generous and allow you to try them out for as long as you like. This way you can take your time to become acquainted with forex and the broker before you are expected to put some real money on the table. A broker that tries to force your hand is probably not the best forex broker for you. Some brokers don’t even bother to provide a demo account at all! Being too eager to take your money is never a good sign, regardless of how good they may seem. Always remember, you are not searching for the best forex broker out there – you are searching for the best forex broker for you and you alone.
Choosing the Best Forex Broker – Chapter 4: Account Types
So, once you get familiar with the ins and outs and all that goes with them, it is time to open an account, and the best forex broker will have just the right selection. Before getting started, it might behoove you to define your goals in advance. This has nothing to do with the best forex broker per se, but it is extremely important for you and may ultimately influence your choices and decisions down the road. Most forex brokers offer a wide selection of account types, aimed at all sorts of trades; after all, they wish to appeal to as many people as possible, but what is the best forex broker for them is not necessarily the best forex broker for you. It may seem like a good idea to opt for large brokers with lots of clients, but safety is not always in numbers. What we are trying to tell you is that, if there are too many people involved and something happens (like a market crash), then whatever money is available would have to be distributed to all of them, and there may or may not be enough to go around… Well, you get the meaning. The best forex broker is the one who can afford to pay you, and on time.
In any case, you need to set a short-term goal at least, and opt for an account you can afford and that fits into your agenda. The best forex broker will surely be able
to oblige. Some brokers offer one account across the board, while others usually offer several different ones, with minimum deposits and all sorts of perks in the ascending order. Basically, there should be a “mini” account or something similar, aimed at the total rookies. Next, there should be basic and advanced accounts, usually called “Gold”, “Silver” or something similar and there is the top tier account which usually requires a gargantuan initial investment and offers obscene rewards and perks which you will probably never be able to afford. Still, make sure the account is all you need it to be and get to work. Also, some brokers offer promotions and bonus schemes, but keep in mind that the best forex broker does not necessarily involve the best promotions and PR stunts, unless you need it to, of course.
Choosing the Best Forex Broker – Chapter 5: Trading Platform
Ah… trading platform – the tools of the trade. The best forex brokers, like the most, have their own trading platforms, but unlike brokers involved in other financial products, their platforms are usually not entirely online and may have to be downloaded and installed onto your computer or device. Some may offer a mobile platform, but what is truly important is that it suits your needs as well as your trading style, along with any trading strategies you wish to employ. Being able to run smoothly, without compromising safety is what is truly important.
This has been a short rundown aimed at guiding you towards the best forex broker. If you wish to get familiar with specific brokers, there are plenty of reviews online, like the one linked below. Hopefully, this has answered some of your questions and alleviated some concerns.
Some additional reviews can be found here.