Best Forex Broker Online
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The whole essence of Forex trading is the buying and selling of different financial assets such as currency pairs at different trading times and opportunities via Forex brokers. The market is a decentralized global one. It’s also described as an OTC (over-the-counter) market where you exchange/trade currencies like EUR/USD and other assets.
The main thing you do to earn on the Forex market is to exchange one currency for another at the desirable rate successfully. This is known as having a currency pair. With just your computer and the internet access, you’re welcome to the world of Forex trading once you open a trading account with a Forex broker.
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What Makes a Good Forex Broker?
Trading successfully on the Forex market requires that you open an account with a good Forex broker. It’s, however, challenging for new traders to determine just the right broker because the brokerage industry itself is becoming increasingly competitive, no thanks to the avalanche of solutions being introduced and ever-expanding size of the market.
For instance, we have a good number of companies that employ a turn-key solution. Most of them have their brokerage organized as Electronic Communication Network (ECN), Straight Through Processing (STP), dealing desk, and non-dealing desk among others. This, nonetheless, does nothing or little to reduce the competition. So what are those things that traders need to look out for in a broker before making a choice?
To be sure, a simple search on Google will bring up an endless list of Forex brokers who are proud of the in-depth understanding of workings of the market. As a trader begins to understand the nitty-gritty, he’ll identify what he really wants. One can see these by going through reviews of those who are trading with such brokers. In all cases, the things you’d generally like to see in a good broker are categorized below.
Forex Broker Regulation and Licenses
You can’t trust a forex broker that is not regulated with your hard-earned fund. There are a lot of financial authorities out there that regulate and license brokerage firms. You should consider a broker that is not regulated by, at least, one of them risky and should avoid them. A broker that is regulated is fulfilling certain conditions to retain his license. Such regulations are at a cost to broker and are in the best interest of those trading through them.
Since you can’t do without the direct and personalized support of Forex brokers, you need to consider the customer support services of a prospective broker. A good broker is expected to open a 24/7 live chat and to have experts who are diligent and polite. Their response time should never be longer than a day in any case. Check out how the customer support of a broker assists in overcoming withdrawal and other hurdles before choosing him.
Minimum Deposits and Withdrawal Options
Brokers set a certain amount as the minimum deposit to use for trading. Some others don’t have any such restrictions. Some brokers accept as little as $1. But for some, it’s somewhere between $100 and $10,000. Some other Forex brokers set as high as $100,000. Similarly, there are different options for withdrawal and different withdrawal limits. Commissions, processing time, safety, transparency, and currencies traded have a bearing here. All these should be weighed against your circumstances, type of trade, and financial strength before you choose the broker.
Spread, that is, the difference between the “bid” (price at which you’re willing to sell the base currency) and the “ask” (the price at which you can buy the base currency.) This ultimately goes to the Forex broker as the gain. You must factor that into your choice of broker. Calculate what you’ll pay brokers for buying and selling on their platforms at different times. Know the value of each pip, that is, the smallest unit of price movement in a currency pair. If a broker has to two types of spreads (Fixed and variable, or floating spreads) he is likely worthy of consideration.
Bonuses and Promotion
Brokers usually offer bonuses and promotions, but they structure this in various ways. These are incentives used to encourage traders to trade on certain assets, with a certain amount, or at a specific time. Bonuses are also time-based. You can’t just jump at a broker because of a promotional item he is offering at some time. Terms and condition apply to these bonuses and promotions. It’s good to look for a broker that provides the most available promotions and bonuses.
Forex Demo Accounts and Education
The starting point for every new Forex trader is a demo account. The demo account will give you a feel of what trading looks like by allowing you to practice before you stake your funds. You have to open a demo account with a broker you’re considering and test your skills out in a risk-free setting. It is not worth trading with a broker that doesn’t offer you a demo account or that doesn’t provide those invaluable educations through such account.
Both investors and companies use leverage. Leverage, being the ratio of capital you used in a transaction to the margin, can work either for or against you according to the ratio and the direction of your trades. There are different leverage options which bring about differences in the ratio. You should know the ratio of the amount you’re investing based on options offered by each broker. You must weigh different options against the timing, possible trade direction, currency fluctuations, and other factors before choosing a Forex broker.
Safety of Funds
A Forex broker who should have access your funds should be aboveboard in all respects. Of course, you’ll hardly find a broker who would say he is not trustworthy. All of them will claim that traders’ funds are safe with them. But there can be clues here and there. Apart from examining reviews in-between the lines, you need to ask if the broker offers the traders segregated accounts, for instance. If funds are segregated, brokers can’t use traders’ funds or their deposits to finance some unauthorized businesses. An ideal broker depends on commissions, spreads, and other clean sources to make money, not ripping off the traders on his platform. Choose the broker with whom you feel your funds are safe.
Trading Condition and Style
Traders must weigh their trading needs against the style of the broker before making the final decision on who to trade with. On the Forex market, the three principal trading styles are scalping, swinging and investing. Scalping as a trading a method which means that traders are fast on opening and closing positions. They go for just a few pips distance with an accurate execution as a must. If your trades are those that will be open for a more extended period like days or weeks, a broker with swinging as a trading style will be ideal for you. The investing style is for the traders who trade for a very long time. Here you’ll consider the broker’s reliability vis-à-vis a more prominent time horizon. You should be finding ECN or STP hybrid brokers here.
The track record of a broker is crucial to whatever is to expect while dealing with him. Again, the reputation of a Forex broker can be checked out by considering what people say about him on forum postings, reviews, and similar resources. If comments about a broker regarding funds withdrawals, trading account opening, dispute resolution and things like that are favorable, he’s very likely a reputable Forex broker.
Types of Trading Accounts
One can know the type of forex broker by the kind of trading accounts he is operating. To be sure of the execution quality of a broker, consider what he offers for different categories of traders. There should be different trading accounts for big and small players. It’s essential to see if figures quoted by the trading account are five or four digits in currency pairs. For example, the quote for the EURUSD pair should be five digits. At all cost, any broker that offers trading accounts with four digits only should be avoided because what you’ll get for such trading accounts is re-quotes.
Ease of Account Opening
The findings to be made about the would-be Forex broker should extend to how easy it is to open an account with each of them. Some brokers are willing and able to start you off right away while it might take a while before other brokers process all documentation. Generally, however, it shouldn’t take more than two business days for a trader to open a trading account with a broker. Still, we can’t write off a broker because this process takes longer with him. The broker might just be trying to make sure that everything is in order so that trading can be seamless.
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How We Rate Forex Brokers
Looking critically at the above factors to be considered when choosing a good broker, you’ll find the good news. There are lots of brokers that meet all these qualities, albeit with varying degree. So we rate them to find the best among the bests. And all the twelve indicators above boil down to two, namely (i) financial transparency, and (ii) regulation.
Is it not a reputable company that will take another look into the trade you have some complaint about? And would you not feel more comfortable trading with a broker whose financials and how regulations are open to the public? But how do we go about rating brokers?
We usually consider the number of bodies regulating a broker and the broker’s ratings with the regulator(s).
We also carefully examine various traders’ reviews of each broker on their different activities. Since no one can have it 100% right on 100% of the occasions, we examine how a broker reacts to frank comments from reviewers.
What Forex forums say about each broker is something we consider essential. Forums contain a wealth of information from new and experienced traders. Their inputs affect the rating of brokers since they always narrate the positive and negative sides of different brokers.
Our ratings of the broker will become more apparent as we analyze some of the top Forex trading platforms.
Forex Broker Regulations and Licenses
It is clear from the rating of trading platforms and the discussion of what to look for in a good broker that regulations and licenses are worthy of consideration.
This keeps popping up as a significant safety concern for traders and investors. And this is rightly so because the presence of regulators imparts confidence on investors. Licenses being shown by a broker give the information regarding the regulator of that broker, and by extension, the quality.
Such information is vital because there are a lot of regulators in the world that issue licenses to the Forex brokers. And there are serious variations in the type and scope of licenses being issued by different regulatory bodies.
For instance, a broker will first receive a local license until the valid regulation processing is concluded. Forex broker regulators would want to ensure that brokerages have a clean bill of health before permits are issued. This they do by probing deep into the financial condition of such companies and investigate their past dealings. The experience of the key figures, starting with the CEO, is most crucial here.
Some Forex brokers don’t just stop their authentication at getting the endorsements of only their local regulators. They seek the memberships and endorsements of reputable professional bodies and government financial agencies.
Therefore, it will be to look more closely at these regulators and evaluate the implications of the licenses they issue. Below is a list of regulatory organizations and their countries of operation in a tabulated form alphabetically.
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Assets to Trade With
As new traders begin to understand Forex trade, the question about assets to trade with comes to the fore. Even the existing dealers will have to know not just how to trade, but also what to trade with, when trade, and with whom to do the trading.
These are unavoidable indicators of success in Forex, and the full grasp of these skills is one the separators of the successful traders from the struggling ones. Sometimes, making the correct choice of Forex assets to trade with is more crucial than the understanding of analytics since almost all traders have equal access to the technical analysis. This makes it tougher to compete using its methods.
Certain assets which seem profitable in the beginning may not be worthwhile in the long run because they will attract beginners with quick gains. However, if features of such trades are not well understood, these newcomers will find themselves being thrown out of the market before long.
It’s instructive to itemize factors to consider in choosing assets as below:
- volatility (size and time chart)
- availability and reliability of fundamental data
- availability of the analysis of exchange amounts
- technical parameters of transactions like commissions, spreads, and swaps among others
- correlation with other assets, that is, the asset’s dependence on the adjacent markets
Some of the most popular assets you can trade with are currency assets, commodity, stock, digital assets, and the indices assets.
Forex Brokers #1 – Currency Pairs
This is the asset that everyone wants to trade in. And what is commonly used is the classification of currency trade assets based on daily trading volumes. Since this is the investment approach preferred by Forex brokers and banks, it’s perceived as the most convenient classification for clients. But that’s not how professional traders classify currencies.
It’s considered safe by the small traders to trade currencies on volatility, and the following factors are what they usually give a thought to:
- Ex Commodity Floating: Currencies of countries that have free exchange rate formation mechanism and whose economies are diversified
- Ex Commodity Pegged: Currencies of countries that have fixed exchange and whose economies are diversified
- Commodity Floating: Raw currencies of countries that have free exchange rate formation mechanism
- Commodity Pegged: Raw currencies countries that have a fixed exchange rate
When considering currency assets, it’s clear that the most exciting Forex trading assets are the raw currencies, commodity currencies that are highly dependent on one or more of the several primary goods with potentially high volatility.
That’s why you more often get pairing like EUR/USD, HKD/SGD, SGD/KWD, AUD/CAD, AUD/JPY, AUD/NZD, CAD/JPY, CHF/JPY, EUR/AUD, EUR/CAD, EUR/JPY, GBP/CHF, GBP/JPY, NZD/JPY, and G10 currencies.
Commodity assets may seem to be complex initially from the standpoint of beginners and outsiders. But trading in these assets via CFD and Forex Brokers can be simple and quite profitable. Traders in commodity assets are making encouraging profits because their price movements can be accurately studied by understanding technical analysis. Examples of such assets are oil, gold, and silver and so on.
- Oil: This is a major Forex trade asset to trade with. It has a strong influence on the global economy and significantly affects international policy. Therefore, oil is a Forex trade asset to be well understood by Forex traders. The four critical oil assets in the financial markets are Brent, WTI, Urals, and Light Sweet. Both natural and geographical factors affect the market price of oil, and these are significant factors to be studied by anyone trading with oil on the Forex market.
- Gold: Gold has been a trade asset since the time immemorial. Historically, it has been an asset shelter. For example, if there’s a slight upset in the Forex market, to salvage their equities, big players quickly convert and store them in gold. They feel comfortable that they’ve taken their funds away from a potentially dangerous zone. Gold is one of the raw assets that you apply a technical analysis to succeed. Throwing all cautions to the wind, some traders even trade in gold automatically. Beginners are attracted to gold because of its high volatility, high spread, and strong correlation with essential currency assets. It has a strong direct connection with both a dollar index and a price of oil. Gold also has a role to play on the international stock markets.
- Silver: Next to gold is silver. While gold can be described as a means of wealth accumulation, silver is a technological raw material. As a Forex trade asset, it’s growing its demand as it has its natural inventories reduced. Silver is usually traded on the Forex market as a CFD contract. Crucial to trading in silver are trade conditions, mainly spread and terms of expiration. Characterized by high volatility, its price can fluctuate up to 60-80% annually. And trading in silver can yield stable profits, on a medium term, at least.
These are financial assets that are easily predictable. Their value rises and falls in response to the results and prospects of the operators in the corporate environment. That’s what speculators based their activities on to generate returns.
The emergence of cryptocurrencies at the time that the Forex market has gained prominence and is still increasing its number of investors is remarkable. Thus, cryptocurrencies are providing viable alternatives to fiat currencies with their sometimes restrictive regulations. Bitcoin, followed by Ethereum, ripples, and others are enjoying natural pairing on the Forex market.
Index trading is a great way to speculate on lots of the top financial markets in the world. Indices as assets are financial derivatives calculated as a weighted average of prices of groups of top performing companies listed. Indices are there to provide information about how a group of stocks performs. And these become assets for the trade in those stocks. The value of each index change based on the total performance of the shares it represents.
FAQs on Forex Brokers
New investors in Forex might have been troubled by some of the following questions. Even the experienced traders might consider the answers to them instructive or see them as useful reminders.
The Forex market has designed what can be described as cleaning mechanisms that sooner or later will sieve out quacks and pretenders. Thus, due diligence is a must if you must decide who to partner with. And learning more about the trade and the market should never stop if you want to continue to succeed in this trade.
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