The foreign exchange (forex, or FX) is the largest financial market in the world – and as you can imagine, the potential for profitable investments can be quite real. There are quite a few factors that make trading with forex brokers attractive; from the liquidity to the fact you can trade on a margin. It’s also the most actively traded market in the entire world, and over £3.5 trillion is traded (on average) every day.
To help you to navigate the complex landscape of the foreign exchange market, we want to give you a little assistance before diving in. We’re here to help you see why forex brokers deserve your time and consideration. We will also see how they could be used for your future investments.
Why Do You Need a Forex Broker?
Unfortunately, the foreign exchange market isn’t the most beginner-friendly place. It can often seem rather complicated and risky for a novice to jump into. In the beginning, you might feel like it’s just not worth the money and hassle. However, the investment potential could be enough to keep you engaged.
Forex brokers services may be just what you need if you find yourself returning to the idea of trading and the potential profits attainable, but are uncertain how to proceed. Trading with them is beneficial for experienced traders as well, so they’re certainly something to consider.
How Do You Find Great Foreign Exchange Brokers?
While you may find that solo forex trading can be complicated, sourcing a good broker may not be quite as much of a challenge. In fact, you could come across many options simply by looking online. The internet is one of the most powerful tools in your arsenal, so why not make the most of it?
One of the first things you should do when looking is search for the best brokers around. If you’re in the UK for example, find out which ones are popular in your area and why – fortunately, there are plenty of great resources you could look into to learn more about the best options and who you should pick.
Alongside this, you’re going to need to have an understanding of what makes a good broker. Here are just a few factors that may be worthwhile to keep in mind when filtering through:
- Good brokers need to offer high security
Before you genuinely consider a certain forex broker as a candidate, you’ll have to ensure that they offer a high level of security. After all, you’re not going to want to risk having your cash stolen by cybercriminals. To check the credibility of a broker, you’ll need to see if they are a member of a regulatory body. This could be the FCA (Financial Conduct Authority) for example, or PRA (Prudential Regulation Authority) in the United Kingdom.
Most trusted brokers will be more than willing to prove that they are part of a regulated body, so it should be relatively easy to find this information. If it isn’t, that may be a warning sign to keep on looking.
- Are the transaction costs manageable?
In general, you’ll find that all good brokers will charge transaction costs for every trade, which could be based on the spread, or a set commission that the brokerage has in place. Most individuals searching for the right broker will want to consider their budget and find quality services for acceptable rates if they want to make the most out of their investments.
While you need to be able to afford your broker, it’s also important to ensure that you don’t go for services that are too cheap, just for the sake of saving cash. Finding the perfect balance between security, nice features and low transaction fees can be unique to each trader, so take the time to think about what you want overall.
- How easy is it to deposit funds and withdraw cash?
A broker will only be keeping your money to make it easier for you to trade, so there isn’t any reason for the act of depositing and withdrawing money to be difficult. Usually, good forex brokers should allow their clients to do both without any problems and relatively quickly.
Depositing and withdrawing cash should be both fast and straightforward, so if you find that a particular brokerage seems to make it harder than others, it may be best to continue your search.
- What is the minimum trading platforms need to offer?
In most cases, the trading activity you participate in on the forex marketplace goes through a brokerage’s trading platform. Because of this, you’re not just looking for a broker, but also what their platform has to offer.
There can be a lot to consider in just this aspect of your search alone. Here is the minimum you might want to look for in a trading platform:
- A reliable news feed
- Easy-to-use charting and analysis tools
- User-friendly interface
- 24/7 Customer support
- Data security
- Fees that are worth the services
What Else You Should Consider During Your Search?
Additionally, you might want to find out if they specialise in specific trades or digital currencies, or if they offer a more well-rounded service to their customers. In many instances, you may be better off with a firm that has a more diverse range of currencies and options for trading if you don’t want to limit yourself. This could give you the chance to try something new and see if it works for you.
Remember, forex brokers aren’t all the same. Therefore, take a little time and effort to find one you’ll be happy with for the long term.