You might have at one point in time considered forex trading, but the complexities surrounding the trade might have put you off. At first, you might be scared stiff by complex terminologies like currency quotes, lots, technical indicators, economic data, zones, pips, Forex charts, and more.
Forex trading is a learning experience that requires patience and lots of learning to grasp the fundamentals of the markets. Forex markets are markets where currencies are bought and sold depending on the value of the other currency.
It is necessary to evaluate yourself before entering into forex trade by analyzing whether you have the drive, courage, and focus of the trading activity. Additionally, be ready for the lies and tricks of fraudsters who abound in this trade.
With that background information, the first step is to open an online account with a broker. There are hundreds of online brokers, each claiming to be the best in the market, and this is where your first challenge comes to light. This article serves as a guide to choosing a suitable broker based on the following criteria:
In this trade, you need guarantees that your money will be safe and sound and that the profits you will be earning are safe. Don’t be deceived by the appearance of the broker or scammer in that case. Even the presentation of a seemingly well-designed website doesn’t mean the owners are genuine.
What you need to look at is the broker’s track record, the registration documents, and certifications by relevant authorities.
Initial Deposit Requirement
Many a time, the broker would ask you for a deposit. While it is ordinarily safe for you to tread carefully and offer fewer amounts, it is not prudent as it amounts to undercapitalization. A genuine or serious broker would ask for adequate initial deposits bearing in mind that small amounts could be wiped out in case of fluctuations. The key here is to invest what you can afford.
Spreads are what is payable to the broker regardless of the profits or loss. Therefore, choose the broker with competitive spreads.
Deposits and Withdrawals
Your savings and profits should be readily available for withdrawal at any time you want. Similarly, if you are not satisfied with the services of a broker, the broker must facilitate your closure with ease. For deposits, the broker should provide seamless services.
Margin Requirements and Leverage
When choosing a broker, go for the one with minimum leverage. A broker should gradually increase leverage as you gain experience in the markets. As a beginner, don’t go for a broker who will start your forex trade with maximum leverage. You are still learning the ropes, and you need to develop your skills as time goes by.
Your choice of the trading platform should be tamper-proof so that no one tamper’s with trades. Go for easy to use platform to avoid issues when trading.
You are better off with helpful brokers who will handle your issues of system delays, deposits, and withdrawals. It is paramount that the customer service desk understands the techniques of trading. Read through website reviews of the brokers to establish if they are the right fit. If their reviews obtain complaints, bear in mind that their service is poor.
There are several packages available. The best way to go about this is to choose one with customizable features and those with adjustable leverage and margins.
Choose a broker with a variety of tradable currencies on offer. In essence, the broker should offer a rich mix of currencies from the currencies of developing nations to the currencies of developed economies.
Forex regulating authorities depend on your country and locality. CFTC and NFA regulate commodity brokerage in the United States, The Australian Securities and Investment Commission (ASIC) regulates forex trading in Australia. The Swiss Federal Banking Commission (SFBC) is the regulatory body in Switzerland. Financial Services Authority (FSA) regulated Forex in the UK.
Forex trade carries a high risk, and high degrees of leverage can work either way, and it is imperative to carefully consider your objectives before deciding to invest.
Whether to invest or not is your individual decision based on your risk appetite and leverage. On entry, you need the courage to overcome the emotional aspects of the forex trade.
There are many experiences that you encounter along the way before you become an established trader. There are lies and tricks of fraudsters to overcome in this business.