Top Factors to Consider Before Entrusting Your Earnings To A Forex Broker

table with currencies forex

There are a lot of online forex traders. However, not all of them will lead to successful trading and profitability. Therefore, it’s essential that the broker you choose is right for your trading needs. We will take a look at five important factors to keep in mind before you entrust your earnings to a broker.

  1. Regulation

This is an important factor to keep in mind when picking a broker or money maker. If your forex broker is regulated, they will be adequately capitalised if you experience losses while trading. They will also be able to keep your money secure and engage in fair practice so that your trades will be carried out at the current market prices. You should choose a regulated broker to be accorded these protections.

stamp with regulation for forex

Many countries have forex trading regulatory agencies, although the laws can vary under different regulatory organisation. If brokers are operating in more than one country, they should be registered and licensed by regulators from all the countries that they operate in. Although majority of them list which regulators have licensed them and provide registration numbers on their websites, you can confirm this information by checking the websites of the listed regulator(s), some of which include:

  • The National Futures Association (United States)
  • Financial Conduct Authority (United Kingdom)
  • Australian Securities and Investment commission
  • Swiss Federal Banking Commission

Regulated brokers also accord you security. You will be fine with them handling your personal and financial data. It is also important to pick trustworthy financial brokers because they have access to other sensitive data like bank account information, copies of utility bills and passports. Be careful, after all, you are trying to make money, not lose it. Caution can’t be overstated; internet insecurity has lead to customers’ financial information being stolen, disruption of trading activity and identity theft. Reliable brokers like CMC provide tight spreads and deliver competitive and reliable pricing in harsh markets.

  1. Convenience in withdrawing and depositing

Good forex trader brokers should make it possible for you to deposit and withdraw money without any problems. They have no reason to withhold your profits because they only keep the money to facilitate trading. Consequently, the process should be quick and smooth. If any problems occur, it should be easy to contact them and for them to fix it. The competence of a forex broker’s customer care or technical support is as critical as their capability of executing trades. Make sure that they are kind and helpful when you are opening the account and when providing after sales service.

  1. Business model

A forex trader can choose between desk dealing brokers and no desk dealing brokers .Desk dealing brokers make the bids when clients get into or exit the trades. In the model, traders place orders which are then directed to the dealing desk out of which some trades are sent to the liquidity providers and some are manipulated by the brokers themselves. With the no dealing desk brokers, clients’ orders are directly passes to liquidity providers. Hence the broker is only a link between the clients and inter-bank market rates.

transaction costs in forex

  1. Transaction cost

Look for the most affordable rates since trading costs have a huge impact on profitability. It might seem like you are spending just a little bit more but costs ultimately accumulate, especially for high volume traders. Nevertheless, you should not sacrifice reliability for low transaction. Ensure that you find the right balance between low transaction costs and security. There are trade-offs to picking low cost brokers. More expensive brokers usually offer high quality service that include research and market analysis, training materials, customer services and trading tools. It’s true that you get what you pay for.

  1. Platform

Always check what trading platform your broker has to offer. Check if you’ll have access to free news feed, easy to use technical tools, or information that will guide you when trading. If the activity is happening online, ensure that their e-trading platform is easy to use. Their technology should also serve factors as customer support, bridges and risk management tools.

Bottom Line

There are a wide range of forex brokers out there—and some are more credible than others. Before partnering with any, endeavour to do meticulous background research as it can make or break your trading experience.