How to choose a broker: most important tips and tricks
How do you choose a broker that you can trust? It can be difficult, because you will find many brokers on the Internet, and each of them will have negative reviews and dissatisfied clients. How do you feel safe giving your money to brokers? I will tell you everything I know about choosing a reliable broker who will not cheat you.
You may need a broker with zero spread, a huge deposit bonus, special accounts or other special features. Let us consider what you should consider when choosing the best forex broker.
A good broker is an important part of successful trading. You give your money to a broker, you rely on him to execute your trades, you need his help when something goes wrong.
Don't trust the reviews.
You can't trust the reviews about brokers that you can find on the Internet.
Most brokers know that you are looking for feedback about them before opening a trading account. This is why they purposely create fairy reviews and post them all over the internet. They leave bad reviews for their competitors and good broker reviews for themselves. It will therefore be difficult for you to understand whether the reviews are true and written by a real trader or if they are fake.
More often than not, the negative reviews you will find will attract your attention. If during the release of important news and high volatility, your broker widens the spread and your stop-loss gets hurt, you are likely to leave a negative review on this broker. However, if your broker provides you with a good service and you are happy with everything, you are unlikely to write about it. Therefore, this is an extra reason to think about the positive reviews that you will find on the Internet and who leaves them.
Often, many brokers have different offices and representative offices in different countries and regions. At the same time, one and the same broker may have good service in one representative office, and bad in another. If you are unlucky with the service at one representative office, you leave a bad feedback on the brokerage company as a whole. Therefore, the number of negative reviews can be significant, but it will not be an indicator of broker performance.
The most important broker selection points
Most traders are looking for a broker with the lowest spread. However, there are much more important things to pay attention to. And the spread, as a rule, will be low enough for all brokers, because the forex market is quite competitive and spreads are now about the same for all brokers.
Always invest a small amount of money in a new broker first. And only then, if everything goes well, gradually contribute more money.
Your broker must be able to regulate itself reliably.
The regulated broker has external control, which limits his fraudulent actions.
However, not all regulators are the same. Good regulators monitor strict compliance with the rules (for example, sufficient capital is checked, regular audits are conducted). Bad regulators do nothing at all, but only sell their stamps for a small fee.
The best regulators will be in Singapore, UK or Australia. The bad ones are in offshore areas, the Cayman Islands, St. Vincent and the Grenadines, or countries you have never heard of.
Good service and support
A good broker should provide support in 24/5 mode and be prepared to answer all your questions politely and professionally and help to deal with your problems. If the broker does not provide such service, then there is no excuse for it and it is better not to deal with it.
Choose a broker with reliable and fast client support. Check how you can get in touch with them. Test them. You can even talk to the broker support before you sign up to see how they respond.
Currency of deposit
Many brokers only offer accounts in the major currencies USD and EUR, however some brokers allow you to have rouble accounts.
How does this affect you? Having an account in a currency other than your bank account or e-wallet can lead to higher commissions during I/O transactions. I do not think this is a big problem, but you may prefer to have an account in a certain currency.
Supported depositing and withdrawing methods
Ways to deposit and withdraw funds are very important, but nowadays most brokers support all popular payment systems. You can use bank transfer, plastic cards, electronic wallets.
Check the available deposit and withdrawal methods before you register with a broker.
Minimum deposit
All big brokers have minimum deposit from $10 to $500. This should be considered if you have limited capital to invest or if you just want to try real money trading.
Bonuses
Bonuses can be very attractive, and some brokers have much better bonuses than others. Some brokers do not offer bonuses, while others offer bonuses on every deposit. Check out the bonuses available before you sign up with a broker if you want extra free funds.
Available trading tools for trading
I mean currencies, indexes, stocks, commodities, crypt currencies, etc.
Some brokers have a limited list of instruments that you can trade with. Other brokers offer a wide range of instruments. The list of trading instruments can also change with the same broker with different account types.
Most brokers allow you to trade on major and cross currency pairs. But not all of them offer exotic pairs such as USDRUB, USDINR, USDMXN.
Spreads
Since spread is the price you pay to trade in the market, it is preferable to find a broker with low spreads.
Currently, many brokers have spreads roughly the same, so just make sure that the broker through which you want to trade has spreads close to the market average.
Some Forex brokers offer accounts with zero spreads and different commission percentages.
Related resources:
Algorithmic trading with Expert Advisors