Looking for a new forex broker (or your first forex broker) can feel daunting. A lot of new forex traders take advice from friends and families, and join whichever platform is recommended to them. But while references can be valuable, it’s highly recommended that you do your own research. After all, this is your money. It’s important you feel comfortable with the tools provided by your broker, and that you are in the best possible position to succeed.
And while we’ll add the obligatory disclaimer that choosing the ‘right’ forex broker is a subjective thing, there are certain elements of broker’s service that our objectively better or worse than their competitors’. Here are some of those elements.
This one is obvious. An aesthetically pleasing trading platform is great, but you trade to make money; and the lower the fee you pay to execute your trades, the more likely you are to make money. It’s pretty straightforward, yet many forex traders neglect this consideration to some extent, especially beginners, who might favour a broker who are unwilling or unable to do the research.
The fees charged by a broker can make a massive difference to the value of your account. Even a decimal of a percentage on spread can make a difference, especially if you’re executing numerous trades over the course of a year. A few p here, or an extra point on a spread can really add up.
Access to a broad range of markets is up there with trading fees as the No. 1 most important consideration you’ll make when choosing the best forex broker. Any online forex broker will have major pairs available – USD to GBP, EURO to USD, AUD to JPY, etc. But if you like to stray off the beaten path a bit, you’ll want a forex broker that offers exotic forex pairs.
Exotic pairs are thinly traded currencies that tend to be less liquid than major pairs. While not everyone will miss being able to trade exotic forex pairs, more advanced traders will want to be sure their broker has access. Though risky, these often fluctuating markets offer a quick path to significant profits (as well as losses). The more access a broker has, the more opportunities its clients have.
This one will probably depend on your level of expertise, but joining a site that has good educational resources can be greatly beneficial. Whether it’s an FAQ, a blog section or live webinars, having help close to home makes improving your stratagems quick and convenient.
Now, if you’re picking between a forex broker with brilliant resources and high fees, and a broker with minimal resources and low fees, you’re probably best to go with the latter. There are a lot of ways to supplement your knowledge – i.e. Google – but there’s no way to recoup the extra money you pay on the higher fees. But if you can find a forex broker that offers competitive fees and good educational resources, that’s the place you want to be.
Functionality is important in just about any theatre of investment, and forex trading is no exception. You want to use a platform that’s convenient, intuitive and capable of executing trades quickly. The best online brokers offer slick, easy-to-use platforms, but different brokers have their own proprietary strengths and weaknesses. Just as often, it comes down to subjective preference of the aesthetic and controls.
Another thing worth consideration is mobile vs web platforms. Again, the best forex brokers will give you both options, but some specialize in one over the other. If you’re own preference is to trade from your phone, you’ll want to partner with a forex broker that offers a great mobile platform, like the MT4. If you’re more comfortable trading from your desk, a top-notch proprietary web platform is key.
Some forex brokers will offer signup bonuses. They may match a percentage of your initial deposit, or give you a certain sum once you’ve invested a minimum amount of money. These bonuses can be great, but remember that they’re bonuses. They shouldn’t be the primary reason you choose one broker over another.
It can be hard to ignore a few hundred pounds, even in the face of higher fees and broader spreads. But those fees add up awfully quick, and your bonus can wind up just a portion of the savings you would have acquired by going with a more solid broker.
Think of bonuses as the bells and whistles of online forex brokers. They’re great to have, but they’re no substitute for substance.
Some brokers will take the opposite position of your trade, so they profit when you lose. In these cases, your broker has an active rooting interest for you to fail, and that, for obvious reasons, is less than ideal.
Mark neutral brokers don’t take opposing positions. They have no vested interest in the outcome of your trade, but instead profit from the fees they charge to execute your transactions.
Alright, now you know what to keep an eye out for. It’s time to check out our list of top forex brokers.
Some of them offer the chance to open a demo account, so you’re able to use the platforms with fake currency to build your comfort level. If you’re on the fence, it may be worthwhile to open a few demo accounts and see what fits you best.