New regulations are coming out around the world on forex trading. Because of this, traders are always looking for new brokers. For example, in the United States, you can only have a 1:30 leveraged account. That is why many traders in the country decide to go with an offshore broker.
Many traders in the United States, for example, preferred to go to Australia because the leverage is much higher there. For example, Blueberry Market was a preferred broker for a long time. However, regulations are now changing in Australia, so people are looking to move again.
While the main thing when choosing a broker is to stay in profit, you want one that you can trust with your money. It would be highly unfortunate if you were to invest all of that time choosing a broker, only to lose it all to a scam. Do you want to know how to avoid forex broker scams? Payback has a nice brief on things you need to be on the lookout for. Read on to find out how to avoid them in the first place by choosing the right broker.
Maintaining a Profit
One of the main criteria for selecting a broker is always being in the money. To be profitable in forex trading, you need to have low spreads. Spreads mean that the selling and buying prices at any given period of the traded currency need to be very close to each other, so the price doesn’t get out of that range by a lot for you to make profits. The recommended spread should not be more than 1 pip. A 1 pip spread across the range of currencies traded on the platform will be preferable.
Low Commissions
You need to be very wary of the commission your broker is charging you. What is your broker deducting you every time you put in a trade? Remember, whether you profit from the trade or you lose the trade, your broker stands to make a profit. For example, something near $0.07 for every 0.02 lot size is a fair brokerage amount.
Some brokers offer free trading. i.e., they will not charge any platform-related brokerage for your trades. It sounds very good on paper, but there is a catch. The platforms that give you free brokerage tend to have very large spreads. Their spreads might go all the way up to 5 pips, and you end up losing a lot more in every trade.
The Preferred Trading Marketplace
Most people that trade in Forex also like to trade in indices or cryptocurrencies. The broker that you choose needs to be able to perform all the types of trading that you are interested in. For example, you like to trade in Dogecoin. You can also like to trade the US 30 index, and the main forex currency pair that you trade is the USD: GBP. If your broker does not let you trade in all three, you should look elsewhere.
Put the Broker to the Test!
Before you finalize on a broker, be sure to test them out. Almost every legitimate broker out there will allow you to create a demo account. Once you open a demo account, you can see the spreads in detail as well as the commissions. Don’t just go by the spreads and commissions displayed in the sales pitch. Monitor every currency pair and make a few trades over the next few days to see if there are any hidden charges.
One of the most important things to test out is their customer service. You will surely have some questions about the platform during trading. Contact their customer support and see what response time they have. Also, see how they deal with your follow-up questions. The one thing you can’t test with a demo account is whether you can easily withdraw your funds. Do a Google search to see what customers’ experiences have been with the platform.
Finally, a fine point you need to keep in mind is the contract and position size that your broker offers. It will be clear as soon as you start using the demo account.
Keep all of these points in mind as you look at different brokers. Take your time with the demo account tests. It is better to spend a few weeks choosing the right broker than to spend a few months trying to recuperate from trading losses.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.
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