Forex brokers often come in different shapes, types and even conditions. With retail forex trading surging in recent times largely thanks to the evolution of technology and lower costs, forex brokers often tend to compete with one another. It is not common to fall prey to forex brokers who often hype up the facts under the disguise of marketing. For a gullible trader it is easy to fall prey to such marketing tactics and by the time a trader realizes their folly it is often too late. However, on the flipside more competition among forex brokers translates to more choices for the trader.
So, if you are a trader who has been trading for a while and has for one reason or another unhappy with your current broker, here are a few tips to help you ensure that you don’t end up in the same trap again.
Determine how much you want to invest
Forex brokers nowadays offer different types of trading accounts with different trading conditions depending on how much a trader invests. This is often a great starting point to start your research into choosing a forex broker. Pay attention to, or build a comparison of the various brokers’ trading conditions that they offer. Take into consideration comparison points such as spreads, commissions and so on in order to determine or at the very least narrow down the list of forex brokers you want to consider.
Are you a scalper or a long-term trader?
The above question might seem irrelevant at first by plays an important role when it comes to choosing a forex broker. If you happen to be a scalper, then you should be paying attention to the spreads being offered by the broker. Likewise, if you are a long-term trader, then you should be paying attention to the overnight swap rates that are charged besides asking the question if the broker allows for hedging on the same currency pair or instrument.
Banking and the fine print
After building a fairly decent list of potential forex brokers that you want to consider, the next step is in delving into the details such as banking transaction fees that are charged by the broker. In this day and age, there are still quite a few forex brokers who charge a commission for depositing via an e-Wallet or another payment method of your choice. Such unpleasant surprises often come up right when you are ready to make a deposit. Likewise, paying attention to the fees being charged by the forex broker for withdrawals also need to be considered.
Trading terms and conditions
It is important for traders to read up on the broker’s terms and conditions before depositing funds. The terms and conditions, boring as they might seem often contain nuggets of information that could save you from a big hassle in the future. Most importantly look for details such as order execution, trading dos and don’ts. Traders usually tend to skip this part only to realize that they were trading against the broker’s terms just before requesting a withdrawal on that big profit they have made.
While there are many more other factors that come into play when choosing a forex broker, traders should also make a cursory glance at factors such as regulation, licensing and also do a bit of a background research into the broker and their business model before they decide to trade with the forex broker of their choice.