Are you looking for specific information that can make your broker selection process easier for you? Well, we have got the same for you. Here is a forex broker checklist that can help you make an ideal choice by checking every box. The list entails everything you need to know. So, stay there and continue reading!
Choosing A Forex Broker : A Complete Checklist
Here are some essential factors that can help you choose the right forex broker according to your trading needs:
Don’t Trust Cold Calling Brokers
Getting a call out of the blue from someone you don’t know and to whom you didn’t give your number is likely to be a scam. Never ever trust such a broker, as almost every regulatory body condemns cold-calling practices.
Check The Regulatory Status Of The Broker
The ultimate key to choosing the right forex broker is regulation. Make sure the broker is respected and secured. This can be done by cross-verifying their registration details with the regulator to ensure whether or not they are allowed to operate in your country. Furthermore, you should also check your own local regulations to ensure the broker is permitted.
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Investigate The Broker’s Authority
Another important tip to finding a suitable forex broker is going through the financial background of the broker. This will require your due diligence and find some information about the broker’s history. Every piece of information regarding the broker is important, including the years since they have been operating, whether they have received any awards, who the team members are, and most importantly, whether they hold a solid reputation among other traders.
Check The Broker’s Transparency And Customer Service
Transparency means disclosing everything no matter what. Make sure everything is available on the broker’s website, such as fees, terms and conditions, trading instruments, leverage and trading brokers review. Furthermore, all this information should be in an easily understandable language.
Customer support is also essential, so check the available contact methods, their response time, and how professionally they answer you back.
Select A Broker Who Stores And Segregates Your Funds In A Reliable Bank
These days, you will see that all brokers have segregated accounts at reputable banks as mandated by the regulatory bodies. This is something a regulated broker has to confirm. Along with this, make sure that the bank they are using for this service has a good reputation in the market.
Check If The Forex Broker Offers Negative Balance Protection
If you are a new trader, you will see your balance getting wiped out in a flash of a second. Hence, you must choose a broker who offers negative balance protection. Negative balance protection is necessary so that you lose more than what you are depositing, making it an essential thing to check upon when selecting a broker.
Check If The Broker Offers Insurance
All the regulated brokers associated with top-tier regulators will offer insurance up to $100,000 and can even go beyond in some cases. This is a worth-looking factor in getting protection in the event of a dispute or insolvency.
Examine The Execution Type
As you might know, there are various types of brokers with different execution methods. Thus, you need to make sure you choose one that can help you execute trades in the way you want. If you are more interested in market liquidity, an ECN broker will be the best option. STP broker is ideal for stock investing. You can even go with a hybrid ECN/STP broker if you want the benefits of both of them.
Check If The Broker Has Banned Any Trading Techniques
You will never want to deal with a broker only to find out later that they ban the trading technique you plan to use. Whether it’s scalping, day trading or sniping, ensure that the broker permits you to use the desired strategy.
Inspect The Broker’s Spreads And Commissions
It goes without saying that every broker wants the lowest spreads possible. Anything below one pip is generally considered reasonable. However, if you are planning to go for day trading, choosing a broker offering raw spreads starting from 0 pips is a good option.
Look For Your Favorite Account Type
Different brokers have different account types available. Some include nano accounts, raw spread accounts and even accounts that permit you to trade ETFs and real stocks. Thus, you should browse through all of them before opening one with any broker to ensure you have made the right choice.
