The foreign exchange market is the largest as well as the busiest financial market in the globe, where it handles a trading volume worth trillions of dollars. When and if done the right and the proper way, forex trading can be a very lucrative investment. This is why the forex market appeals to a lot of traders and investors across the globe.
Working With A Forex Broker
While you can directly trade in the forex market, many choose to employ the services of a forex broker, like, because of the advantages they enjoy. Forex brokers serves as intermediaries or middle-men between the forex trader and the interbank market, a system that is used by banks as well as other financial institutions to trade various currencies. Hence, an interbank system would refer to all major banks and all their connections wherein they send currencies to one another.
Forex brokers, provides a way for both retail forex traders and forex investors to connect to the larger market since major banks aren’t interested in having to deal with “small” volumes of money which an individual forex trader puts into the forex market.
What To Look For In A Forex Broker
As forex brokers serves as bridges, it is then imperative that you choose a professional and reliable forex broker to make that connection. Otherwise, you only waste your time and your money. However, with the multiplicity of forex brokers to choose from, it can be overwhelming to take on the task particularly if you don’t have any idea what to look for in a forex broker. To help you in your search, here are a number of things to check when picking a forex broker to aid you in your forex trading endeavor.
HIGH LEVEL OF SECURITY
The major characteristic of a reliable and trusted forex broker is the high level of security they provide. After all, you don’t want to entrust your money to someone who claims they are legit without giving any proof. Thanks to the internet, checking the legitimacy and credibility of forex brokers is now easy and simple as there are strict regulatory bodies around the globe that separate forex brokers who are trustworthy from those who aren’t. Here is a list of these regulatory bodies and their corresponding country:
- AUSTRALIA: (ASIC) Australian Securities and Investment Commission
- CANADA: (IIROC) Investment Information Regulatory Organization of Canada
- FRANCE: (AMF) Autorité des Marchés Financiers
- GERMANY: (BaFIN) Bundesanstalt für Finanzdienstleistungsaufsicht
- SWITZERLAND: (SFBC) Swiss Federal Banking Commission
- UNITED KINGDOM: (FCA) Financial Conduct Authority and (PRA) Prudential Regulation Authority
- UNITED STATES: (NFA) National Futures Association and (CFTC) Commodity Futures Trading Commission
Regardless of what type of forex trader you are, you will have to pay for transaction costs. Each time you make a trade, you need to pay either a commission or spread. Hence, look for a forex broker with the cheapest and most affordable rates. However, make certain that that they provide quality service even with such kind of rate. At times, you will need to sacrifice paying more for a much reliable forex broker.
HASSLE-FREE DEPOSIT AND WITHDRAWAL
A good forex broker allows you to make hassle-free deposits and withdrawals as they actually have no reason as to why they should make it very difficult for you not to. Afterall, it is your money and your profits. They simply hold your funds in order to facilitate trading.
When engaging in forex trading online, the trading activities mostly transpire in the trading platform of the forex broker. Therefore, you need to ensure that the platform of the forex broker you choose is stable as well user-friendly. Furthermore, most forex brokers also provide a practice or demo account so as to give you the opportunity to have a feel and run through of how forex trading works.