As a forex trader, one of the most important decisions you’ll have to make, aside from being up to date with trading news, is choosing your broker. As you’ll be giving your capital to them and allowing them to handle your trades, it only makes sense that you choose a company that is not only financially smart but also reliable and trustworthy.
No matter how good you are at forex trade or how many brilliant strategies you have, it will all be for nothing if your broker doesn’t know what they’re doing or runs away with all your money. Here then are some tips that can help you select the broker that is right for you:
- Examine your particular needs.
There are some important questions you’re going to need to ask yourself before looking for a broker. For instance, do you intend to trade small or big? Are you going to do a lot of day trading? And how much capital can you afford to invest? The answers to these questions and more can influence the type of broker you’re going to need as well as the account you’ll have. Ultimately, you should go for a broker that aligns with all your needs.
- Determine the criteria you’re looking for.
After discerning your needs, it is now time to determine what it is that you want—that is, the specific criteria you’re searching for in a broker. For example, if you’re a day trader, you want to be dealing directly with the market and not with a trading desk. You’d also want a broker that is there for you if ever you have pressing concerns or questions about your trades. Lastly, you’d want to work with a legit broker who is regulated in a country that has a stable and established financial system.
- Check out the reviews.
Part of the research you do when selecting a broker should also include looking into the reviews and testimonials about the broker in question. Be careful though—you have to make sure they’re coming from a credible source. There are lots of fake reviews online, both of the negative and positive kind. Also, try to maintain a sense of objectivity. There are lots of traders who, when they lose money, tend to shift the blame to their broker. Remember, it’s common to lose money in forex trading; and just because one loses money, it doesn’t automatically mean they had a bad broker.
- Test out your final list of brokers.
If you’ve done the previous steps and have a short list of candidates from which to make your final selection, it is time that you test them out in terms of their performance. One way you can do that is by opening a demo trading account and working with them for a few weeks. Then open a live account but deposit just a small percentage of the capital that you intend to invest. Trade for a short time and withdraw the funds. It’s worth doing all this to know if your money can be withdrawn easily and if they’ll respond to your concerns quickly.