Probably the most often asked question about forex trading is “Which one is the best forex broker?” The answer is not easy and not simple. First let’s just say that there are LOTS of brokers to choose from. This business became very competitive in recent years and that is a good thing, for customers at least. Spreads are lower than ever, there are many more pairs and other products (such as CFDs) to trade with and generally, it is easier to find a decent broker and much less likely to get scammed.
But that doesn’t mean that it is easy to find the best broker for you. We at FXUnivese know that the small things make a lot of difference at the end of the day. And there are not just small things. Depending on your approach, strategies, preferences, and even the country you are from, there still might be huge gaps between different providers.
We will give you a comprehensive guide to getting you started, but in the end, you will have to make the decision for yourself. As a first advice, take your time! This choice is too important to rush it. And although, you can always change your broker, in our experience traders tend to stick with their decision.
What to look for?
When you choose a broker you have to weigh a number of factors. Properties that you might not even think about can get crucial at one point. Just a short year ago when the Swiss Franc provided one of the biggest moves ever in forex markets a lot of brokers became exposed. They didn’t have proper protocols in place to avoid or, at least, limit losses for the company, and more importantly for customers. How to avoid bad surprises and get the most from your broker? Here is a list to start with:
- The offering
- Costs, margins, account opening
- Additional services and customer support
This should be the primary factor hands down. You will have your money by the broker so you should be 100% sure that it is safe. Of course, you cannot be certain but you should do whatever you can to choose a trustworthy provider. All other things are secondary; low advertised spreads or bonuses won’t get your money back if you opt for a risky company.
How do you know that you can trust a broker or not? This is where you can use the power of information. If you read our article about the Best Brokers and our dedicated reviews about some of them you will already have a shortlist of great companies. (don’t forget to go through the comments section, and provide your own insights—we appreciate every opinion!).
- Plus500 review
- Avatrade review
- eToro review
- Forex Broker Inc review
- IronFX review
- easyMarkets review
But with the ever growing amount of brokers you can easily find other great providers. Be sure to check online reviews, user forums and other sources to validate the company. How long has the company been in the business? How they handled previous crises? What regulation are they under, if any? These questions can help in determining the stability of a broker. A long history and a robust behavior during stress are great indications as well as a strong regulation.
There are some legal matters about trading that you should be aware of. There are some companies that are simply not allowed to provide their services in certain countries. For example, if you are from the U.S., you might find it hard to open an account with a lot of popular brokers. Always check the availability of the broker in your country before deciding. You may start with our in-depth article on the topic here.
For some traders, this might be a deal-breaker. Having lots of options to choose from can be a good thing for some strategies, but it can even be a distraction. Successful traders often concentrate on one or two pairs—if you have too many options you might get lost in them and miss out on the good opportunities. Generally speaking the more products the better, though, and in this regard the trend is good, it is a standard to have 50+ products to trade with.
Costs, margins, account opening
Active traders should look for reliable low spreads as that will be the biggest part of their spending. For longer term positions the interest you pay (or get in some cases) for holding positions for more than one day is also very important (and often overlooked). Account opening bonuses are nice to have—especially for the novice trader, but on the long term other costs are a much bigger sum, so don’t get blinded by promotions.
Trading platforms have evolved dramatically in the last few years and migrated to mobile devices parallel with the smartphone and tablet revolution. Having the comfort to trade on the go and monitor your positions is great, especially if the software is stable.
Brokers who have MetaTrader 4 in their offering are easy to trust as that platform is versatile and mature. Some proprietary solutions are also great, but be sure to get informed or try the demo account to get a first-hand experience with them.
Check out our article about mobile platforms to get an idea about the different on-the-go software choices you have!
Additional services and customer support
Other things that might be useful include social trading, automated trading and Virtual Private Servers (VPSs) for the more advanced traders, managed accounts, and lots of other small services.
One important aspect is the customer support. Hopefully, you won’t need it much, but when you do it is likely that you will need it urgently as your money will be on the line. The best way to find about this is to read forums—only real-life experience should be trusted.
The next step
After you weigh all the factors you should come up with at least two brokers to test. Open demo accounts with both of them and gain some experience a concerning the platforms, the offering, and the additional services before you make your final decision.
Funding your live trading account is another story; you can read about your options in our article about the different methods.
Finally, remember that you can change brokers whenever you want it is wise to keep in touch with the market and check out new offerings as the market is changing all the time!