If you are a novice trader, trading Forex for the first time, then you must first carry a proper research to find a reliable broker. The explosive popularity of currency trading has not only attracted traders but has also led to the increase in the number of online brokers. Previously there were a handful of brokerage services offering FX trades so it was easy to choose the best service, but not anymore! Over the last five years the industry has become inundated with several new brokerage service providers. On the other hand, this has raised a big question of credibility!
For beginners stepping in the Forex market for the first time, here are some tips to find, identify and choose the best Forex broker:
Before you select a broker to Forex trade, you must ensure that the service provider is registered by a reputable regulation body. Registered brokerage service providers follow strict rules and regulations of the industry. For example Plus500 platform can be a good choice to kick-start currency trading as it is regulated by a renowned regulation body, the UK Financial Services Authority.
Spread is the difference between the bid and ask value of a currency. It can be either fixed or floating depending on the broker. The Forex service provider can choose the spread accordingly because the market is not traded through a central exchange market.
For novice players the best FX broker is definitely the one offering fixed spread as it eliminates the high risk factor and over the long term, this type of spread is much safer.
Though a high leverage ratio can be enticing but at the same time it is risky both in terms of trades and brokerage selection. Many fraudulent brokers lure novice traders to sign up by offering too good to be true leverage ratios such as 600:1 or 800:1. So, to ensure you are trading FX through a reliable brokerage service, do look at the leverage ratio. A good leverage ratio is somewhere between 100:1 and 500:1. However, there are also some brokerages that offer traders flexible margin. This enables you to choose the leverage that suits you best.
Demo Account and Technical Analysis Tools
When searching for the finest Forex brokerage service online, make sure it offers demo facility and technical analysis and charting tools.
A demo account is not offered by all. It is a value added facility only offered by a few online brokers. A demo account is a great facility for novice traders. It enables you to practice in a stimulated environment with virtual money. It gives you a chance to experience the real money market volatility and learn basic Forex trading strategies and check out the features. This is a good way to test the waters before taking the plunge and putting your real money at stake.
A good brokerage provides technical analysis tools like the moving average lines, MACD and the Bolinger’s band. Some services also provide real time FX trading news, data and trade signals. Using technical analysis tools, you can make smart decisions by analysing the currency moving trends and predicting the future trend with precision.
Large Variety of Deposit Methods and Quick Withdrawals
Another factor that can help you with your selection of finding a good and a reliable brokerage is to browse through the variety of deposit methods. A good service provider always offers a wide array of deposit methods such as credit and debit cards, e-wallets and money gram, allowing the investor to choose the mode of payment according to the investor’s convenience. Furthermore, it also offers quick and easy withdrawals without any long delays.
24/7 Customer Support
Unlike traditional financial markets, you can engage in buying and selling of currencies round the clock from any part of the world at any time. This calls for an unbeatable customer support. A good brokerage has representatives available 24/7 to assist customers. Such service providers offer assistance to customers through various modes such as telephone, live chat or email. They provide you information and also help solve FX related queries and troubleshoot problems.
To ensure you are trading with the best in the industry, look for a Forex brokerage that offers all these benefits. It will take some time to find one but it will surely be worth it!