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How To Choose Trusted Forex Brokers 2016
If you are planning to diversify into forex trading or start trading currencies for the first time, one of the first things you have to do is identify a trusted forex broker to partner with. This is a very important task as it can have serious consequences. Starting from the forex trading platform offered by brokers to the minimum deposit required to start trading, a myriad of aspects need to be evaluated. The aim of this post is to provide you with some information as to how you can identify trusted forex brokers that are capable of catering to your specific needs.
There are two common ways of choosing a forex broker:
This method involves reading broker reviews and choosing a forex broker based on star rating and feedback. In this case, there are no guarantees. A 5-star rated broker may be the best option for you, but it is not possible to ascertain whether the reviews you read are actually genuine or not. Therefore, this method is not acceptable.
This method involves doing your own research. Reading reviews should only be a part of the research process. The professional way of choosing trusted forex brokers is explained in step-by-step format for your convenience:
Step #1: Know exactly what you want to achieve through forex trading
It makes things much easier if you write down a list of features that you want in the forex broker you would like to work with. You can achieve this by writing down answers for the following questions:
- What currency pairs would you want to trade in?
- What type of spreads would you be comfortable with? (fixed, variable and how many pips)
- Are you ready to pay a commission when trading forex?
- How much money can you invest in forex trading? (this gives you an idea of your account size and facilities available)
- What level of leverage are you looking at?
- What are the tools and indicators required for you to trade forex?
- Do you need any specific trading platform? (for example, MT4)
- Are you a scalper?
- Do you want to hedge?
- Will you need a trailing stop?
- Are you looking at “one-click-trading” execution feature?
- Would you be trading on-the-go and/or do you need trading alerts?
- What type of broker do you want to work with? (ECN/STP or Dealing Desk)
- What options do you want for transferring funds to your trading account? (wire transfer, PayPal, credit card, etc.)
- How much are ready to pay for funds transfer and withdrawing money from your account?
This is not an exhaustive list. You can add your own questions and then begin the research.
Step #2: Visit the brokers’ websites
Scan the network and visit the websites of brokers who have been shortlisted based on the answers to the questions listed in the previous section. Read their forex trading policies and rules, understand their terms and conditions and try to get a feel of their business transparency by checking the availability of contact addresses, telephone numbers, customer support services and information about the regulatory authority that supervises their operation.
If the broker’s website does not list a physical address, either on the Contact Page or elsewhere so that it is clearly visible to visitors, it should raise a red flag in your head. If the address is not available, availability of telephone numbers, live chat facility, skype and email do not count at all. Websites of trusted forex brokers will have a physical address listed out.
The overall appearance of brokers’ websites also gives some indications about their owners. The websites don’t have to be flashy, but they should have a professional touch and links and pages and links should be functional. Trusted forex brokers who are collecting money from clients and providing platforms for currency trading always ensure that their websites are fully functional in all respects.
The next important aspect you should look for is regulation. It is always better to open a trading account with a regulated broker. A regulated broker would register the organization with appropriate authorities and operate under their regulatory supervision. The major regulatory authorities around the world are as follows:
- United States: NFA, CFTC
- United Kingdom: FSA, UK
- Canada: BCSC, OSC, CIPF
- Japan: FFAJ, FSA Japan
- Australia: ASIC
- Switzerland: SFDF, FINMA, ARIF
- Denmark: Danish FSA
- Sweden: Swedish FSA
- Spain: CNMV
- Hong Kong: SFC
- Dubai: DMCC, DFSA, DGCX, ESCA
This is definitely not a comprehensive list; most countries have forex regulatory bodies in order to supervise forex brokers’ activities.
Step #3: Read reviews of selected trusted forex brokers
Reading reviews of forex brokers is definitely helpful, but it can be confusing, sometimes even overwhelming. It is, therefore, important that you stick to the following rules when reading reviews:
a) If the broker has been operating for more than 10 years, you can be sure that the company knows the business and cares for its clients. Otherwise, the company would have been closed down.
b) If the broker is regulated (by the regulatory body of the country in which they operate), you know that the company is serious about its business and is making necessary efforts to comply with the rules and requirements stipulated by the supervising body.
c) If the broker offers several trading products (Forex, Futures, Stocks, Commodities, CFDs, Options, etc.), you can be sure that the broker is running a large business, shouldering more responsibilities and is catering to a large client base.
d) When reading reviews, make sure that there are no mentions about profit cancellations or withdrawal denials. If there are, it should raise a red flag in your mind. One or two stray mentions can be neglected, but you must take a serious view if there are many such reviews.
e) Finally, you should only read reviews written by professionals.
Step #5: Additional tips on how to choose trusted forex brokers
Your approach to identifying a trusted forex broker should be similar to one you use to choose a bank and entrust your money. The factors to be considered are reputation, transparency, ease of depositing and withdrawing funds and customer support service offered.
Finally, never agree to the terms and conditions without reading and clarifying with the customer service representatives. This is because many Forex brokers often forget to update their websites with changed trading conditions.
Related Pages of Trusted and Reliable Forex Brokers
- Regulated Forex Brokers
- MT4 & MT5 Forex Brokers
- Top Gold Trading Brokers
- Forex Brokers That Offer Bitcoin Trade
- Best Forex Brokers for Scalping
- Best Online Forex Brokers
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