If you’ve decided to take part in the highs and lows of Forex trading, you will need to select a broker. What makes some FX trading accounts better than others? Identifying the best is a combination of researching brokers and highlighting some pitfalls to avoid! While the Forex market is becoming more regulated, there are many unscrupulous brokers who should be avoided!
Low costs, demo accounts and no deposit bonuses are all great. Yet the first-time trader needs to do their homework before opening FX trading accounts. When researching a broker to hold your FX trading accounts, retail forex traders must learn to separate fact from fiction. For instance, faced with all sorts of forums posts, articles and disgruntled comments about a broker, we could assume that all traders fail and never make a profit. Disgruntled foreign exchange traders whose trading strategies fail to be profitable will post negative online content blaming brokers. Learning to see through sour grapes will help you choose a good broker.
As there are some unscrupulous brokers out there, we recommend the following steps to avoid the worst:
Do some online search for reviews of brokers giving you some insights into each broker. Be aware that you will rarely find any broker without a negative comment. It’s up to you to work out how serious and real that negative comment is.
Ensure there are no complaints about not being able to withdraw your money. If there are, contact the user if possible and ask them about their experience.
Read through all the fine print of the account opening documents when opening FX trading accounts. Incentives to open account can often be used against the trader when attempting to withdraw funds. If a trader deposits $1,000 and gets a $200 bonus, loses money and attempts to withdraw the remaining funds, the broker may stop the withdrawal of the bonus funds.
Firstly make sure they offer a variety of assets to trade such as Forex, Stocks & ETF Trading. Most should also offer Cryptocurrency trading. Equally as important is they have a fast and efficient withdrawals, ideally free of charge. Next, ensure that there are limited or no commissions and low spreads.
Most brokers will offer you a practice account but it is worth checking what the terms are. Some will give you an unlimited amount to play with, others will cap this at $50,000. Some brokers are severe and maybe just after your money. They demand the trading account be approved and funded before you can open and use a practice account.
When choosing a Live Trading Account, its worth checking the minimum deposit which can vary between $250 -$10,000, though some will have no minimum. As a general rule when starting off, it’s better to start small as you learn how to trade.
Bonuses such as stylish & powerful platforms, free forex signals, market research, online education and webinars are welcome but not indispensable. Some brokers will even give you the choice of two professional trading platforms, such as TraderPro and MT4. These can help spot candlestick patterns.
At times Forex markets can be volatile for which brokers cannot always ensure that an order will be executed at the desired price. This can result in losing far more than you had expected. The same is true for stop or limit orders. Some brokers guarantee stop and limit order fills, while others do not. Even in more transparent markets, slippage occurs. Markets move, so we don’t always get the price we want for our FX trading accounts.
Problems can develop when communication between a trader and their broker breaks down. If a trader only gets vague answers to questions, this can be an alarm bell that their best interests are not being met. Any issues should be resolved efficiently and helpfully; this displays a broker who is worth trusting. One of the most detrimental issues is the trader’s inability to withdraw money from their FX trading accounts. If you are not able to withdraw your funds, contact customer service.
If you are satisfied with your research on a particular broker, open your FX trading accounts with a small amount of capital. Trade it for a month, so you get some feel for Forex trading, and then attempt a withdrawal. If everything has gone well, it should be relatively safe to deposit more money. When you have problems, attempt to discuss them with the broker. If that fails, move on and post a detailed account of your experience online so others can learn from your experience.
Before accusing your broker of having sold you an unsatisfactory FX trading accounts it might be worth reading through all documents. This is to make sure that your broker is actually in the wrong! If you have missed something or failed to read the documents you signed, you may have to assume the blame.
If you find the broker is at fault and does not adequately answer your questions or provide a withdrawal you may have to take extra steps. These steps could include posting comments online or reporting the broker to the appropriate regulatory body in your country.
When opening FX trading accounts, aspiring forex traders should realise that trading for beginners is full of pitfalls ready to make you lose all your cash! With such a challenge for the novice trader, finding the right combination should be a priority. This can involve an easy to use interface, good customer service and a supportive environment that offers simplicity. Foreign exchange trading is high-risk and may not be the best option for individuals brand new to trading. Learning the basics such as how to trade successfully, risk management, emotional control and diversification is the next challenge!