By: Damian Okonkwo
Choosing a forex broker today is really something that every trader must study carefully as to make the best decision. Often the success and failures of the trader depends largely on the broker chosen. Some brokers have been known to manipulate the market frequently setting it against the trader, which leads to blowing up ones account. Others charge very high commissions for trading with them while some are basically scammers in disguise of brokers; who allow the trader to deposit with them and then block the trader from withdrawing and contacting them again after making deposits. This work therefore outlines the major criteria every trader must consider while choosing a forex borker for trading.
The criteria to consider when choosing a forex broker
· Regulatory Compliance
· Wikifx Verification and Approval
· Year of Establishment and Past Records
· Trading Account Features
· Range of Financial Markets
· Customer Support
· Trading Platform
· Education and Research
Regulatory Compliance
Regulatory compliance could be said to be the first standard that every broker must satisfy before ever anyone should proceed to invest with them. This implies that the broker must be registered with the various regulatory bodies existing within and outside ones country. Being regulated entails obtaining the necessary licensing with market regulators to provide financial services and products in a particular country/region.
In South Africa for instance, the major regulatory body foreseeing all forex activities which every broker is expected to register with is the Financial Sector Conduct Authority (FSCA). Similarly, in other countries we have FCA for UK, SEC for US, ASIC for Australia, CYSEC for Cyprus, etc.
The FSCA has many duties which revolve around providing regulatory protection to retail traders in South Africa. They ensure that clients funds are safe and that each broker pays the investors all their profits and returns at each point demanded by the trader. Hence the FSCA requires the forex brokers to keep these funds in segregated accounts with top-tier financial institutions for top-most security. The funds are not to be used for operational purposes and must be available for withdrawal by the client at any given time. The forex broker is obligated to submit frequent audits and inspections on financial records to the market regulator for review, which ensures that the forex broker can fulfill its financial obligations.
Wikifx Verification and Approval
Wikifx has today become a watchdog and independent forex regulators apart from the government existing today across the different countries and with extensions in South Africa. Wikifx carries out the selfless task of verifying that any broker that appears in the forex market today is fully registered with and approved by the regulatory bodies we have examined above. Similarly, wikifx examines the quality of services rendered by these brokers and makes same known to traders to assist them in making decisions on which broker to invest with. A general rating for all the brokers performance, General traders comments about brokers (both positive and negative comments), offices and headquarters and rich educational contents about forex market is provided by wikifx to assist all traders in the trading experience. These information are provided on the wikifx.com website/apps recommended for download and daily consultations by all forex traders.
Year of Establishment and Past Records
It is very important that every trader should consider the year of establishment of a given broker and their past records, before taking the decision of investing with them. This is a way of guarding against the new and unregulated brokers simply opening up their establishments for the purpose of scamming unsuspecting investors. It is advisable the traders should consider first those brokers with at least 10-15 years of establishments and with good records as their first choice of brokers. The various years of establishment for each broker can be found on the wikifx website.
Trading Account Features
It is very necessary to pay attention to the various types of account offered by each broker and the minimum amount for trading them. It is expected that each broker should incorporate for each country they operate the countrys own local fiat currency to make it easy for deposits and withdrawals with less commission fees. In South Africa for instance, the forex broker is expected to offer ZAR denominated accounts, exempting South African traders from currency conversion fees when they deposit and/or withdraw funds. This holds same for other countries too.
Range of Financial Markets
Another important factor to consider is the range of markets that the forex broker offers, apart from currency pairs. Forex brokers who offer a wide range of tradable financial instruments offer retail traders the opportunity to diversify their portfolios, guarding them against market risks along with several others. Hence an ideal broker should have wide range of financial instruments such as: FX, Commodities, Indices, Stocks and Cryptos.
Customer Support Service
Every good broker must create an easy access channel through which the customers are able to reach out to them and present their challenges. Often good broker assigns an account officer to each customer to offer him/her 24/7 support services.
Trading Platforms
A good broker must make their trading platforms accessible with all mobile devices such as: Smart phones, Macbooks and Laptops. South African traders are advised to first test the trading platforms using a demo account to evaluate whether it suits their trading needs and objectives.
Education and Research
A good broker must always have the success of his traders at mind always. Hence, Forex brokers typically offer their clients a wide range of educational tools, materials and resources that they can use. These are typically used by beginner traders to help them learn more about forex trading. However, education is also useful to advanced traders who are developing new trading strategies.
Consequently, a good broker is expected to provide a good number of research materials and trading tools to assist the traders in technical analysis, fundamental analysis, an economic calendar, newsfeed, blogs, trading calculators, and several others.
Ease in Deposits and Withdrawals
The ease with which a trader can deposit and withdraw funds is a very important consideration in choosing a forex broker.
Apart from offering deposits/withdrawals in ones local fiat currency, the forex broker must offer a wide range of reliable funding methods such as:
· Electronic Fund Transfers (EFTs)
· Bank Wire Transfers
· Credit Cards
· Debit Cards
· Electronic Payment Gateways
· Cryptocurrency wallets, and even more.
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