For first-timers, choosing a trusted forex broker can be a daunting task if you don’t know where to start. This shouldn’t discourage you from venturing deeper into the forex market. In fact, it is the right thing to do especially when diversifying your financial portfolio. Should you be considering taking a few steps in that direction, it is time to make very critical decisions in choosing the right forex broker. Settling on a trusted forex broker means that you will be able to maximize your future financial gains giving you the best platform on which you will gain headway in the forex market. Before you even get started, you need to take into account the following tips that comprehensively cover pointers that you will need in choosing a trusted forex broker in the USA:
Regulation should come first on your list because it is the most important factor to consider just before settling for a particular broker. Mostly, regulation helps in eliminating a few concerns and risks that come with the forex business. It is pointless opening your forex account where your funds will be unsafe or at risk of getting stolen and misappropriated. Doing forex business with unregulated broker means that you are putting your profits at the risk of being squandered by untrusted individuals. But with a regulated forex broker, you will always have peace of mind knowing that your profits are in safe hands.
However, it is not just any other regulated broker but you should choose one with high levels of security. Even though some brokers come out to claim their legitimacy, you should never buy into their stories unless they are under regulatory supervision. Apparently, various regulatory bodies have the responsibility of regulating different brokerage firms in relation to the country where they are operating their forex trading business. For instance, such functions in the U.S. are normally handled by National Futures Association (NFA) as well as Commodities Future Trading Commission (CFTC). Therefore, you should always verify that the broker of your choice is a member of one of the recognized regulatory bodies before you make any transaction.
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- Customer Service
Customer service in forex trading is another important tip you should consider. This means when choosing your trusted forex broker in the USA, it is prudent that you settle for the one you will likely contact whenever you encounter some problems along the way. The broker of your choice needs to be in a better position to handle the account and any other technical support issues with ease.
As a matter of fact, this an essential factor to make the whole forex trading process a success. In this regard, your forex broker should provide you with after-sales support and act professionally at all times. The broker in question needs to have a proper channel with which all the clients can access their services at will. And the channels can be in the form of email address, skype, live chat, phones and so on.
- Educational Portal
For you to succeed in the forex market, you need to have relevant education in line with forex trading. How do you go about with that? The answer is simple; just make sure that you register with a legitimate broker with enough resources that will help acquire the right knowledge. Doing so will help you avoid the obvious tendency of running even before you can walk and it can turn out to be a costly affair on your side.
Accessing the right educational portal will provide you with the right channel where you will familiarize yourself with the way forex markets work in the USA. You will learn some helpful terminologies that are only common with forex trading. Apart from that, you would want to stay abreast with the ever-evolving forex market and the only way to do so is through a proper educational portal.
- The Right Trading Process
When it comes to the forex trade, transparency is paramount. Lack of it among different brokers is of great concern and should act as a red flag for you. And one such transparency issue is stopping hunting. The term stop hunting’ refers to a practice where a number of crooked and questionable market maker brokers decide to move prices via a dealing desk. This is done in an attempt to stop some traders despite the market prices being a few points below.
Stop hunting has in the recent past become a great concern among traders where brokers try frantically to undercut them with the aim of making an illegal profit. But once you are experienced, such an issue will not worry you anymore given that you will be knowledgeable enough to avoid it.
As a result, a platform should be put in place to check on transparency issues such as stop hunting, slippages, and platform freezes. It can be done by testing the platform using minimal amounts in the actual money account to know if it works. Therefore, the broker you choose should be transparent and not one who indulges in any of the dodgy and questionable activities.
- The Location of the Forex Broker
By now you are fully aware that forex trading is a worldwide phenomenon. This is to inform you that you can do forex trading from anywhere or any country in the world. But there are a few geographical advantages that determine the choice of your trusted forex broker.
For some countries, the trade is not as diversified as in others due to the nature of bureaucracy that comes in place when setting up the business. You can choose to work with forex brokers in the USA as a country that has well-established forex as well as commodity trading. Such countries have put up enough measures in place to protect stakeholders against forex trading issues.
- Trading Platform
Before you settle for any forex trader in the USA, you need to know the two major platforms that are adopted by forex brokers. These include the proprietary and generic/white platforms. The Proprietary ones are designed and built in house with the help of brokers while the white labelled platforms are built by the third party and they bear the brokers branding in the form of logos.
Apparently, the most popular example is MetaTrader 4 (MT4) by MetaQuotes which are adopted by most forex traders today. With other examples such as cTrader and Sirix Platform coming into perspective, it is important that you test-drive the proprietary platforms to have a better idea of their structure and interface that will suit you as forex trader.
Given that the trading platform plays a crucial role when it comes to the broker’s operation, you will discover that most of the brokers provide their clients with a selection of different types of trading platforms. These are desktop or download, web Trader and Mobile trader platforms. It is your responsibility to find out the type of platform your ideal forex broker will offer you even before you get started.
- Spreads and Commissions
Just before you choose your forex broker, you should have at the back of your mind the spreads, and commissions that a broker will eventually levy on your forex trade. This is due to the fact that trading costs represent a determinant factor of your ability to make some profits when trading forex. Why is the case? Because the higher the trading cost, the more prices favour the trader before making any profit from the forex trade. This should give you a clue of the type of forex broker you are about to work with.
To make it clear for you, commissions are the main source of the broker’s profits and they are dictated by the spreads. Since the most popular pairs of currency have narrow spreads a legitimate forex broker should be in a better position to enlighten you on this observation. The broker should clearly tell you that these narrow spreads and pairs will give you higher profits than less traded pairs. From your agreement, you may split the profits/spread with your broker. Therefore, choose to work with the broker who will give you a comprehensive insight into spreads and commissions.
By choosing a trusted forex broker in the USA, means that you are on the right track. As such, it is advisable to take a while and devote a considerable amount of your time looking for a broker who meets the points highlighted above. Settling for the right forex broker will definitely be a determining factor for your success in forex trading.