Novice traders often need help choosing the right broker for online currency trading. They need step-by-step instructions that clearly define all the significant factors that they need to pay attention to. Let’s talk about this in this article.
Why Do I Need A Broker On Forex Trading?
Forex is a commonly accepted designation for the global interbank currency exchange system. Forex is an over-the-counter market where electronic currency conversion transactions are conducted online.
This market is characterized by the highest level of liquidity when compared with the securities market and other segments of the financial instruments market. Essentially, a currency exchange forex is trading in currency pairs (EURUSD, USDJPY, GBPUSD, and many others). The exchange rate changes quite often – that’s why forex is considered a highly volatile market.
How To Choose a Forex Broker?
The main participants of the system forex banks are banks that actually execute currency purchase and sale transactions, acting both on behalf of clients and in their own interests. However, remote access to this market can be obtained today by absolutely anyone who has a computer or mobile device with an Internet connection.
Trading is carried out through a special program-a web-based terminal for forex trading. These programs are distributed freely, and anyone can install them. But this is preparing to work on forex is clearly not limited.
To fully trade on forex, a private speculator must enter into an agreement with a broker-a qualified intermediary of this market. Through such a broker, a trader (investor) opens a trading account, deposits the required amount of money in it, and, accordingly, gets the opportunity to make currency purchase and sale transactions.
Trading on forex trading is conducted by a private speculator on a margin basis, that is, the trader automatically uses leverage secured by funds available on the trading account. This “leverage” is provided by the broker – this is a standard service. At the same time, a trader can either sell or buy a certain currency on forex operations are performed through a broker and can be performed in any sequence:
If a trader plays for an increase – he first buys (opens a position), and then sells (closes a position). If a trader plays short, he first sells (opens a position), and then buys (closes a position). The main principle of making a speculative profit is to buy cheaper and sell more expensive.
Thus, the full-fledged work of a private speculator on forex trading is not possible without the participation of a broker. That is why choosing the right broker – a qualified intermediary-is the right choice. Forex – is important for the trader.
Criteria While Choosing A Broker On A Market
Deciding on the choice of an intermediary on forex, a private trader should review and compare several brokers. Each option needs to be examined from the point of view of a number of important parameters:
Reliability and reputation of the intermediary Forex Trading. You need to check up-to-date customer reviews on independent websites, whether the broker has licenses (both Russian and foreign), and the age of the brokerage company (the older the better).
Terms Of Trade
This factor allows you to evaluate the profitability of cooperation. Special attention should be paid to the presence of a game account (you need to start working with it), minimum requirements for the deposit amount (good, if you have a choice), and conditions for entering and withdrawing money (the more payment systems, the better).
In addition, an important parameter is the number of commissions, spreads, and swaps charged by the broker when making transactions. Another nuance is the way the broker generates rates. Thus, clients ‘ transactions can be displayed on the interbank market (this option is better) or settled within the brokerage company (there are risks since the broker can trade “against” the client himself).
And, of course, you need to take into account the choice of assets for trading currency pairs, and CFD contracts (the wider the range, the better).
Security of the trader’s work. If a broker asks its client for documents (scanned copies) to verify the trading account, this is considered a good indicator of responsibility.
Customer Support Service
The best service option is 24/5 service (i.e. around the clock from Monday to Friday). At the same time, the variety of communication methods, responsiveness, and competence of employees are important.
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