15/09/2016
Questions to ask your Forex Broker.
1. Does the broker have tight spreads & low commission?
Based on research from Forex brokers’ and independent client surveys (including Investment Trends – the largest of its kind worldwide), this is typically the number one choice on a client’s wish list when trading. Let’s face it, the majority of traders choose to trade Forex in order to make money, so it makes sense to have your costs as low as possible – as that leads to greater returns. For a lot of traders, the difference between a profitable trading account and one that isn’t can be about the amount paid in spreads/commission charges. The amounts quickly add up and most traders don’t even realise it. Here’s a useful example: Let’s say Broker X has a EURUSD spread of 1.7 pips (the worldwide broker average on this pair) and no commission. If you placed 10 standard FX lots per month that’s $170 in brokerage costs alone! That same EURUSD trade at another broker, let’s say Broker P, could have a 0.0 pip spread plus a $7 commission, meaning 0.7 pips per lot. Therefore, the total cost is $70. That’s a $100 difference per month, or $1,200 per year!
2. How about fast ex*****on?
The ability for you to place a trade and get in/out quickly can spell big differences from broker to broker. You need a broker which invests heavily in infrastructure, ideally a co-located platform and servers close to where the banks and trading servers are. In non-trader speak, this means having all your servers located in the one area to make sure there is as little delay as possible when technology needs to talk to each other. A delay of over 1 second can cost just as much in a month as a wider spread can, so don’t underestimate the power of technology!
3. Are they reliable?
Choosing a provider which is experienced is just as important as spreads and ex*****on. A reliable platform and a reliable client service means knowing your broker is there to help in good times and bad. This means as a minimum your broker support needs to be available from when the FX markets open all the way through to when they close on Saturday morning (or 5pm Friday in New York – the ‘unofficial’ close). That’s 24 hours a day, 5 ½ days per week.
4. Are they regulated?
A top tier regulatory body such as those found in Australia (ASIC), UK (FCA) or USA (CFTC) means strict compliance and safety of funds procedures to ensure your trading account funds are held safe. All of these regulations mean that by law, a broker segregates client funds from their own company funds. It can also mean they are not located on a beautiful tropical paradise such as the Seychelles or British Virgin Islands (if indeed they are) where you’re probably not likely to be able to reach them if something really goes wrong. This is definitely something that you want to ensure you get right.
5. Do they have a variety of Forex trading platforms and tools?
Some brokers just offer the standard MetaTrader 4 platform, which is similar to offering you the empty shell of a car. It’s what you put inside it that counts. Brokers should also have different platforms and mobile apps so that you can see which one you prefer to ensure the best trading results. Self-service tools like a Secure Client Area can also be really handy, giving you the ability to deposit and withdraw, as well as tools and resources to help you maintain your trading account as you trade without any hassle.
6. How easy is it to deposit and withdraw?
Another important one is how to deposit and withdraw from the trading account. Are there many ways to fund the account? What are the fees involved? Does the broker have a self-service client area to be able to do this and track the request occurred or has been processed? Withdrawing should be easy too. After all, they are your funds and you should be able to gain access to them if you need them. The broker should have a policy that if a request is submitted it is processed within a certain time frame. For example, if requested by 7am in the morning – it will be processed that same day.
7. How many products do they have to trade?
Opportunities present themselves in the markets all the time. You could be a strict FX trader and suddenly see an opportunity in the gold market, or on the S&P500 should you choose. The broker should have a wide range of products whether that is Forex, CFDs, metals, oil or commodities.
8. How long has the broker been in business for?
Unfortunately when it comes to financial services, newness can be liability. Watch out for red flags such as a newly established broker operating in a non-regulated environment that you struggle to find information available online or from other traders about their service. Sometimes being a guinea pig is too great a risk when it comes to your own trading and especially your own money!
Raise fund: http://smartenterpriseonline.com/app/product.htm
