Forex and CFD brokers have a responsibility to help trade in the foreign exchange market, especially by providing a platform for traders to buy and sell multiple currency pairs.
Forex is the largest financial market in the world; therefore there are many brokers working in this field. Finding out which one is right for you is a confusing but important process, as your choice of broker can affect your success; choosing the wrong one could be financially devastating.
This article highlights some of the key points to consider when making your choice.
Important Considerations When Choosing Forex or CFD Broker
A broker that suits one trader is not necessarily right for another, and it’s important to conduct thorough research to find the right one for you.
Consideration should be tailored to your personal circumstances, but here are a few key points to keep in mind:
Is It Regulated?
A key consideration when choosing a forex or CFD broker is security.
You hand over finances and personal information, and you will want to be sure that both are protected.
You will also want to be confident in the reputation of your chosen broker and the details; actually ensuring that it will not be out of business, or worse, cheating you out of profits.
The leading forex and CFD brokers in the UK will be regulated by the Financial Conduct Authority (FCA). This means that it is compelled to operate at a high level of fairness and transparency.
Legal information should be clearly displayed on the broker’s website and the FCA registration number listed.
What Are Its Trading Costs?
The next thing to consider when choosing a forex or CFD broker is cost.
While some work for the commission, most make money through spreads.
Spread is the difference between the buying and selling price in a currency pair and, depending on the type of trader, can have a significant impact on your profit margin.
Take a look at the average spreadsheet offered by each broker to find the one that works best for you.
In addition to spreads, you will also need to consider the minimum deposit required and any other fees the broker may apply, such as rollover costs (overnight hosting fee), interest rates and withdrawal costs.
Make sure you read a small transcript of each broker’s service agreement to avoid unexpected expenses. And remember that the cheapest option is not always the best. Look at the amount of money rather than the very low cost.
Which Trading Platforms do they offer?
The trading platforms offered by the forex or CFD broker are very important, because that is where you will run all the trading activities.
You will want a forum that is accurate, easy to navigate, tailored to your level of knowledge and comes with a list of helpful features to help inform the best trading decisions.
Most of the leading Forex or CFD brokers in the UK offer the popular MetaTrader 4 (MT4) platform and their platforms, many of which you can try before making any commitment with a free demo account.
Does It Provide Good Customer Service?
The broker does not provide you with a one-time service. It supports you in all your trading activities, so it is important that it provides good customer care.
A good broker should be able to communicate easily, handle problems well and provide a reliable trading guide. Check out the customer reviews of each potential broker on your list to see how they accumulate.
When considering customer service, also keep in mind the level of support each broker provides with teaching tools and resources. Leading Forex or CFD brokers want you to make a good profit and will often offer video tutorials, articles and webinars, most of which are available free of charge to account holders.
Is It Compatible With Your Trading Style?
The type of trader you are will have a huge impact on the best broker for you, so be sure to check how well your offer fits your trading style.
If you are a scalper, an opening and closing trade to accumulate a small profit several times a day, you will need a broker who provides a strong spread and does not emphasize the minimum time between entry and exit the market.
If your strategy is focused on the carry trade, where you intend to hold positions over time to profit from interest rate differentials, you’ll want to look at a broker’s rollover pricing and swap rates.
In addition to the above, you should also keep in mind things like:
- Available leverage
- The types of accounts on offer
- The range of currency pairs available for trade
Ultimately, choosing a good forex or CFD broker comes down to thorough research.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
