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If you’ve decided you want to start trading foreign exchange (forex) then you need to find a broker. (There is a list on our Broker Listing page.) Here are some tips on how to go about selecting the broker that will be right for you.
1. Make a Wish List
You need to know what you want from your forex broker, so make a list of your requirements. Decide which of the items on your list are essential, and which would be nice to have but are not deal-breakers.
Some of the things to put on your list are:
- The currency pairs you want to trade
- How much leverage you want to use
- The trading platform you want to use
- The minimum trading account size
- The tools and indicators that you want to use when you trade
- The transaction cost
- How long it takes to withdraw your profits
You may have other criteria you want to look at as well.
2. Do Your Research
The more time you can spend looking at various forex brokers and examining the services they offer, the better your chance of choosing one that is right for you and can be trusted.
At the very minimum you should do the following:
- Look at the broker’s website, to see if it looks professional and robust
- Check that the website gives you the company’s address and phone number, and clearly sets out how you can contact customer support
- Read their policies, trading rules and their terms and conditions
- Check if the broker offers the things that you want – check them off your wish list
- Find feedback from people who have used the broker – not just testimonials on the site, but comments posted on other sites
- Read reviews, but bear in mind that reviews can be fake
The more you know about a broker, the better you are able to tell if it’s right for you.
3. Check Out the Broker’s Reputation
How long has the broker been in business? If it has been going for ten years then it’s a fair bet that it’s a legitimate operation, otherwise it would have folded by now. If it was only set up yesterday then you’ve no way of knowing whether it’s reliable, so avoid it!
Also, make sure the broker is regulated by the appropriate regulator for the country in which it is based.
4. Contact Customer Support
Before you open an account with a broker, you need to know how responsive they are to questions and problems from customers, so try emailing customer support with some queries about their services. If they don’t respond quickly or fail to give full and useful answers, that’s a danger signal.
Try calling their customer support number and see how long it takes for the phone to be answered. If there’s no one on the other end of the line – or if they can’t answer your questions in a satisfactory manner – that’s not a good sign at all.
5. Set Up a Test Account
Brokers should let you set up a test account so you can try some ‘dummy’ trades. This lets you try the trading platform, to see if you like it.
In conclusion, don’t rush into making your decision. Take the time to make sure the broker you want to use can be trusted with your money.
You can compare respected brokers on our Broker Listing page.
