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Forex Education Series

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

 

How to Choose a Forex Broker? (Part 2)

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Introduction

This blog post will be focussing on the second part of How to Choose a Forex Broker? (Part 1) enabling traders to identify a legit and reliable forex broker to start trading forex. To know more about forex, please read What is Forex?

1.Competitive spread

Spread is unavoidable cost in forex trading, as it is the main source of compensation for the forex brokers. Most of the time, tighter spread is preferred by traders, as it contributes lesser cost for exiting and entering a trade. However, cheapest option is not always the best, as low transaction cost can be the tactic used by unregulated brokers to tempt the traders. One of key things that has to be noted is making sure that the spread is including brokers’ commission to avoid extra hidden charges.

Spread can be classified into “fixed” and “floating” spreads. The former is a constant number of pips between the buy and sell rate while the latter can vary with the market conditions. Hence, it is important for traders to decide which type of spread that suits your trading style before choosing a broker.

2.Re-quotes

A re-quote occurs when the price changes after an order is placed. Traders will be required to execute a new re-quote price if they would like to proceed with the order. This will cause a problem, as the delay can mess up your entry point and trade or even keep you in a bad condition longer than usual leading to greater losses incurred. If constant re-quote happens in a forex broker, tight spread is actually not enjoyed by the traders like what is advertised by the forex broker.

3.Customer support

Forex trading operates 24 hours per day, so a forex broker’s customer support must be available at any time. A good customer support should be highly responsive, reliable and easy to be accessed, so as to solve the issues or enquiry as soon as possible. To ensure that the customer support fulfill your expectation, you can send some email or call them directly to enquire on some of the topics covered in this article before selecting a forex broker.

4.Demo Accounts

Opening a demo account with the forex brokers that you have narrowed down is a good idea for you to familiarize with the platforms and basic trading concepts before opening a real forex account.

Conclusion

Selecting a reliable, legit and regulated forex broker is very important, as forex trading is a high risk investment. Thus, we should understand our needs in forex trading based on the criteria discussed in this blog post before selecting a forex broker.

 

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