One of the questions I often get asked by novice traders coming in to the forex market for the first time is “which is the best forex broker?” As if I just happen to know the answer off the top of my head! In truth, there are so many forex brokers out there that it is virtually impossible to state categorically which is the overall number one. One broker might be more suitable for trader A whereas another broker may be better for trader B. So there is no definitive best forex broker as such.
Having said that, when you are planning to set up a new account with a forex broker, there are a number of things you need to take into consideration, particularly if you are a novice.
First of all, look at the minimum account opening balance the broker requires you to deposit. As a new trader, you may not have a massive amount of capital to play with, so you want to make sure you can open an account with a relatively small amount.
Another thing to be on the look out for is the offer of training packages. There are a number of brokers who specialize in services aimed specifically at traders who are new to the market. Such brokers can sometimes offer pretty comprehensive training programs. So some of these are definitely worth checking out.
Also, take a look at spreads and commissions. Many of the best forex brokers don’t charge commissions on transactions, instead they make their profit from the difference between the buy price and the sell price (the bid and offer spread). So look for a broker who offers zero commissions and low spreads.
Next, you will want to make sure you can access the market easily (ideally via the Internet) and that you can get your orders executed (“filled”) immediately. You don’t want to be waiting around for an order to be filled if the market is moving against you for example.
Finally, look at what kind of leverage the broker offers. This is where you are effectively borrowing money from the broker to trade. So with 10x leverage for example, you invest $5 but are actually trading with $50. This kind of leverage allows you to reap large profits from your trading, but equally it can wipe you out very quickly. So tread with care!
If you take into consideration each of the points above when looking to set up a new account, you might not find the best forex broker for everyone, but no doubt you will find the best forex broker for you.