Highlights

Forex Education Series

Author: fxtrader   |   Latest post: Fri, 11 Jan 2019, 6:02 PM

 

How to Choose a Forex Broker? (Part 1)

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Introduction

There are more risks associated with Forex trading due to the leverage used to amplify the profits gained. Hence, many people have fear and concern to invest in Forex especially when the overwhelming rumours of forex broker scams are spread around through the internet. The forex market is getting more regulated recently, so there are more legit forex brokers available in the market now.

In this article, we will be sharing how to choose a reliable forex brokers to avoid ourselves from being exposed to scams.

1.The simplicity of deposit and withdrawals

Different withdrawal and deposit policies are implemented by each forex broker causing simplicity and speed of both processes differ from each other’s. For example, traders can only withdraw not more than the amount of the initial deposited fund. Hence, a broker that can provide a simpler and faster deposit and withdrawal methods based our personal circumstance are required.

Some forex brokers do offer bonus like free upfront capital in forex trading for account opening. Please read the terms and condition carefully, as not all bonuses are as attractive as they are promoted. Some bonuses does not allow traders to withdraw money, as part of the money are contributed by the forex brokers.

2.Regulation on Forex Trading

The Financial Conduct Authority (FCA) in the UK is one of the most reputable regulatory organizations in the world for regulating Forex brokers and other financial entities. It enforces the rules, services and programs to protect the integrity of the market and investors as well as ensuring the members to meet regulatory responsibilities.

Regulation plays an important role because every regulated broker has to obey “Net Capital Rule” which allocate a minimum amount of capital in liquid form. Therefore, traders will be protected from some unpleasant events such as the unexpected closure of forex brokers. Additionally, regulated brokers are required to separate clients’ fund into isolated accounts, so that clients’ fund will not be used for other purposes without the consent of the clients.

3.Initial deposit

Every forex broker has different minimum deposit which is also a key factor to be taken into consideration before open a forex account with any broker based on the financial ability of the traders. Most of the forex brokers offers a very small initial deposit with leverage to increase the purchasing power of the traders. The common accounts that are available in most of the brokers are standard, mini and micro accounts with different minimum deposit. 

Other criterias 

In the next blog post, we will be continuing this topic by sharing the other criteria to look for selecting a forex broker. Please read How to Choose a Forex Broker? (Part 2) for more understanding.

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