Are you interested in forex trading but wondering how to get started? One of the first steps is to find a trusted online trading broker to succeed in this international currency market.

As a forex trader or investor, you might have specific needs and questions related to the platform, tool or research requirements. Technology has made it easier to trade but also complicated.

The large and growing number of forex brokers in the market requires you to carefully select from the choice of internet ads and websites.

Here are some criteria which will help you finalize the best online trading brokers easily.

 

1. Security

 

Trading securely online must be your first priority. Therefore any good broker must offer optimum levels of security. You can’t just hand over your hard earned moolah without checking if the broker is legit.

Luckily, verifying the credibility of a forex broker is not very difficult. Regulatory agencies across the world help you identify if the broker is trustworthy or not.

The following are a few regulatory bodies in various countries:

  • United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)  
  • United States:  National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
  • Canada:  Investment Information Regulatory Organization of Canada (IIROC)
  • Australia: Australian Securities and Investment Commission (ASIC)
  • Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)

Similarly, you can verify the authenticity of any broker you want by checking with the respective country.

2. Transaction costs

 

Just as you are in it to make money, so are online trading brokers. The way they typically earn is by making money on the spreads on trades. The spread is the difference between the ask and bid price that brokers quote on currency pairs.

So, the same currency pair will have different ask and bid prices for different platforms and brokers.

Your research should help you find out the most competitive spreads offered by a broker.

Also, find out if the spreads are fixed or variable so that you don’t meet unpleasant surprises along the way.

Online forex brokers also make money from the commissions they charge you on a per trade basis. If you’re planning to trade full-time or be a forex scalp trader, then it is worth finding a broker who provides a fair commission structure.

The bottom line is to do your homework well and ask a lot of questions before you go ahead and sign up.

3. Trading platform

 

With the advent of online forex trading, most of the trades occur on the brokers’ trading platform. Make sure the trading platform offered by your broker is user-friendly and reliable.

When looking for a broker, check what features the trading platform offers. Look for free news feed, technical analysis and charting tools and a host of other features that will help you trade successfully.

From accurate forex quotes to the speed of deal execution and order placement features to data security and system downtime - there are many things to consider.

4. Leverage on account

 

Success in forex trading is all about the power of numbers. It’s the size of your trade that decides the size of your profits.

So, the bigger the number, the bigger your rewards.

It’s practically impossible for everyone to put huge amounts of money into forex trades for various reasons.

This is why forex brokers offer their customers with margin accounts certain leverage with which they can trade.

Leverage on account means the broker lends you money to trend and yet it is you who gets to keep the profit.

With the help of leverage, you have the potential to rapidly build your trading capital. However, different online trading brokers offer varying levels of leverage.

For example, a 5:1 leverage means you can place trades worth an additional $5000 on a $1000 trading account. When researching your brokers, it’s important to find out what kind of leverage they offer and whether it matches your trading strategies.

It’s also important to remember that if the trade doesn’t end well, you still have to return the borrowed funds.

Selecting the right broker is all about doing your research, reading online reviews and customer testimonials and understanding the forex trading platforms and market well.

There are many websites and online resources that can help you in your forex trading journey.

Published by Sarthak Sharma