Here is a general overview of the most important criteria when choosing a Forex broker.
Security and reliability
The most important points when choosing a reliable online broker are the security, security and reliability of the Forex broker. The best FX broker and the highest bonus do not mean anything if you can not collect your winnings.
Transaction Costs – Reduced Differentials
A second important issue is the transaction costs. When trading forex with a Forex broker, you should not pay any commission. However, the broker makes money by applying a differential: the company sells a pair of currencies for a higher price than the one that buys the currency pair for you. This means that you buy foreign currencies at a higher price than you can sell them. This is known as the “differential” or “spread”, the difference between the purchase price and the sale price. Reduced spreads mean greater profits for you. Check and compare the differentials of different brokers for the currency pairs you wish to trade. FX traders with reputations have relatively low spreads: They want to make money by attracting more customers instead of stripping the money from traders with too high spreads.
The execution of Forex orders is important. If you click on the “buy” button, you should be able to obtain the currency pair at the stipulated price. An exception may occur when the market is very volatile. But otherwise, you should get the price specified for the currency pair when buying or selling foreign currency. If there is a long delay in the completion of the transaction or if you regularly find a disadvantageous exchange rate (high when buying, low when selling), that is the time to find a new Forex broker.
Software / FX Trading Platform
You should feel comfortable with your FX broker’s business platform. Many FX brokers have developed their own software. Take a careful look at your broker’s software by first trading with a demo account before depositing real money. Alternatively, you can choose a broker that supports Metatrader (MT4 or MT5). In this case, you are not limited by your broker’s trading platform.
Customer Service and Support
Customer service is also important in smart online trading – at least if you are a merchant who contacts the customer service department of a Forex broker on a frequent basis. It is important that customer service is available 24 hours a day for at least five to six days a week. Some FX brokers have a toll-free telephone, or they offer a free return call through a call center agent. An excellent option offered by some brokers is the “live chat” feature, where you can chat with a customer service employee if you require a short, concise response. If you do not speak fluent English, you should choose a broker who offers support in your first language.
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