07. How to Choose a Forex Broker?
In this article, we will educate you “How to Choose a Forex Broker” for your trading journey. We will discuss on all the key factors you must remember when choosing a forex broker. So, let’s start step by step-
Key Factors of Choosing a Forex Broker:
Spreads, Costs & Commission
The first step is considering the costs of trading with a forex broker. All forex brokers make money by charging fees and commissions from every trade you place. These costs can vary from broker to broker. Therefore, it’s important to understand your broker’s spreads, commissions, and fee charges before registering with them. Always choose a forex broker with zero to low spreads and lower commissions.
Forex Swap Rates
A forex swap rate is an overnight interest added or deducted when holding a position open overnight. It’s determined by the interest rate difference between the currencies in the forex pair and whether the position is long or short. Swap rates are usually measured in points.
Some currency pairs may have negative swap rates for both ‘long’ and ‘short’ positions. Platforms like MetaTrader 4 and 5 automatically convert these rates into your account’s base currency. Each currency pair has its own swap charge based on a standard size of 1.0 lots (100,000 base units).
Swaps for FX, Metals, Bonds, and CFDs on Commodities can have triple the usual rate on Wednesday nights. The same thing happens on Friday nights for Energies, Indices, and Cryptocurrencies. You can check the latest swap rates within your MetaTrader 4 and MetaTrader 5 trading terminal by right-clicking on any instrument in the ‘Market Watch’ section. Then, select the ‘Specification’ option from the dropdown menu. This will display the long and short swap rates for the selected pair in a new window.
Regulation
Always choose a regulated forex broker. Regulatory bodies (government agencies) ensure that these brokers follow certain rules and guidelines that will protect you from fraud—Manipulated; actions and other unethical practices. Regulated forex broker ensures fair and transparent trading.
Markets to Trade
When you are choosing a forex broker, make sure to check out the trading assets they are offering. You might want to trade currency spot market, but the forex broker you choose only offers cryptocurrencies or stocks. So, consider choosing a versatile forex broker that offers a variety of trading assets for you to trade.
Customer Support
A good customer service is a very important part when it comes to choosing a forex broker. Any of your concerns or queries regarding your trading account or investment should be dealt with promptly. So, it’s essential to have access to a reliable customer service from your broker. SureShotFX has created a list of top five forex brokers. You can check them out to see if they are worth being your forex broker.
This is what you learned today-
- Choosing a forex broker relies on the costs associated with them
- Spreads, Commissions, and fees should be lower.
- Always choose a regulated forex broker
- Having reliable customer service is a must
