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How to choose the most reliable forex broker?

Currencies / Forex Trading Oct 28, 2017 - 04:17 PM GMT

By: Kavinesh_A


Who is a forex broker?

A forex broker or a foreign exchange broker is a firm that provides a platform to the traders to buy or sell foreign currencies. The forex broker is not an individual person but an organization backed by banks, financial institutions, hedge funds, investment management firms etc. Their functions are regulated by the central banks or other regulatory authorities to allow traders trade in the forex market. The forex market is a huge market that is not dominated by any single authority but links a huge network of exchanges and brokers in the global platform. The foreign exchange market is the largest financial market that witnesses a huge amount of transactions every day. Traders from across the world participate in the forex market to earn huge money while selling or buying currencies.

A foreign exchange broker earns his compensation from the ask-bid spread of a currency pair. E.g. a forex broker buys euros at 1. 3274 dollars and sells the same at 1.3277 dollars, then he earns $0.0003 per euro. So, if he trades for 10,000 euros, he roughly makes a profit of $3 in the process. They trade for a bulk amount of currencies so the profit margin is naturally huge. A Forex Broker owns a small portion of the huge volume of the global foreign exchange market. The exchange rates fluctuate very often and are determined by the central banks based on the volume of foreign currencies traded in the global forex market. The banks and other regulatory authorities collaboratively monitor the buying and selling pattern of international currencies in the forex market.

How to make profits?

Well, to be honest, trading in the foreign exchange market and earning money is not an easy task. It needs stern observation, ample knowledge and years of experience to perform well in currency trading. Traders cannot trade in the forex market individually though it is an open market. He must trade through a foreign exchange broker who provides a trading platform allowing access to the foreign exchange market.  A trader cannot expect to book huge profits from day one of trading. But, with time, he can gain the expertise to predict the fluctuations in exchange rates and perform well in trading. For beginners, most of the forex brokers offer a practice account to start with. You can avail practice accounts for several forex brokers to compare the various functionalities and features. This is the easiest option to make a selection for the right Forex Broker matching your preferences.

The most popular foreign exchange brokers provide training and supply online study materials and tutorials for the traders. You can refer to their websites, blogs or forums for any help regarding forex trading. The forums are really helpful with expert traders answering your queries. They can guide you through your trading journey, suggest you which currencies to trade and provide useful tips to apply. However, the advice and recommendations may differ from one another and you need to pick up the best among them. If you opt for currency trading, the first thing you should do is to gather basic knowledge about the foreign exchange market. You need to know the financial terms, the calculations, rates, rules and everything else that are associated with forex trading. Conducting a detailed research to find the best foreign exchange broker is also highly recommended. The trusted broker will guide you through the proceedings and keep you updated with the fluctuations in rates. But, to become a successful trader and secure high-profit margins in the long run, you must keep yourself updated with the current trends in the global market.

Criteria to choose the right forex broker:

As a trader, you might face many risks and losses if you don’t choose the right foreign exchange broker. Below given are the criteria to avoid any such risks and choose the best forex broker:

1. Features and functionalities: You must check the range of services the broker offers. Preparing a chart with all the important functions and features to evaluate various forex brokers is a good idea. This will make it easier for you to make a selection for the best broker with maximum features. Most of the foreign exchange brokers provide a practice account and a platform for the beginners. It is a great option to choose from a list of potential brokers. Check whether the platform and functions are easy to adopt and operate.

2. Rates and rewards: Different brokers offer different exchange rates with nominal variations. They also provide various other benefits and rewards to attract customers. You must select the forex broker offering attractive rates with best rewards. Also, check if there is any hidden cost involved within the transactions that is not mentioned clearly in the documents.

3. Security: User information including the banking details should be kept with the broker’s database with utmost security. Check the security norms and privacy policies they follow to be sure. Also, trader’s money should be kept in a trusted bank to avoid any risks. The reliable foreign exchange brokers tie-up with insurance agencies to secure the traders’ wealth.

4. Background: Before choosing a particular foreign exchange broker, you must check their background and market feedback. You can get enough information from the internet that will make you aware of their reputation and scams (if any). Foreign exchange brokers that are veterans in the industry backed by trusted banks or financial institutions are the safest to choose. The user reviews might help you gain trust for the brokers who have successfully served their customers with guaranteed satisfaction.

Thus, keep the list of criteria handy to evaluate the services provided by the most reliable forex brokers in your country. Choose the best broker with your eyes open and never make a random choice. Recommendations might help but you must have the basic knowledge and understanding about the currency market to avoid any risk. So, keep yourself updated with the market trends and become a successful forex trader.

By Kavinesh

© 2017 Kavinesh - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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