What to look for in a forex broker

If you’re one of the growing number of new forex trader, you’ll need to carry out your business through an online brokerage platform in this digital age.

However, choosing a forex broker can be far from straightforward, thanks both to the competitive nature of the market and the risk posed by rogue and fraudulent operators.

In this post, we’ll discuss what you should look for in a forex broker and the factors that distinguish viable from the more questionable operators.

What is Forex and What Role do Brokers Play?

The forex market facilitates the trade and exchange of currency pairs, with this global entity home to hundreds of assets that are categorised as major, minor or exotic pairings.

Such pairs will compare the value of two currencies through a classic numerator / denominator relationship, with the base asset on top and a quote currency on the bottom.

Historically, the market was largely exclusive to established and institutional investors, who would connect to the exchange and request orders through a middleman or ‘broker’.

In the digital age, however, all currency trades and forex orders are now facilitated online, through virtual brokerage platforms that also serve as one-stop shops in which investors can analyse data, automate trades and even diversify across a wide range of markets.

As a result of this, even a high volume of trades can now be organised and executed in real-time, making the market and concepts such as scalping far more accessible to part-time traders.

What to Look for in a Broker?

Before we explore precisely what to look for in a forex broker, it’s important to recognise that not all entities of this type have been created equal.

Even if we set aside rogue operators, forex brokers will vary in a number of ways, from their introductory offers and unique transaction fees to the technical indicators that they use and markets that they offer access to.

When choosing a forex broker, the first thing to ensure is that it’s fully licensed and regulated. In the UK, all brokerage sites should be fully regulated by the Financial Conduct Authority (FCA), and if this accreditation is lacking then you could be placing your capital and personal information at risk.

The next step is to review any published starting bonuses or account offers, before checking out the precise transaction fee model adopted by brokers.

This information can help you to understand the broader value proposition offered by the broker, while potentially affording you some free capital that can subsequently be invested.

Don’t overlook the importance of an accessible customer support service, either, as the presence of efficient and constantly accessible agents can help to resolve financial or technical issues almost as quickly as they occur.

Forex trading is not without risk and it is possible that you could lose some or all the money you invest, so it is only suitable for professional or experienced traders

High Risk Warning: Trading Contracts for Difference (CFDs) on margin carries a high level of risk and may not be suitable for all investors