You rarely see a person who has never looked for an additional means of earning. Such a search sometimes takes different forms: someone simply finds a second job, someone accumulates savings in the bank and tries to find more favorable deposit conditions that allow you to earn money, someone invests available funds in more risky projects, one of the most popular of which recently become the forex currency market. Learning all the tricks of currency trading, from the first steps to the end, is a very long and complicated process, therefore, in this article, we will take on a small but very important part for beginner traders – the choice of a brokerage company.
Forex is an over-the-counter foreign exchange market, which, in fact, is a kind of connecting link between various exchanges that operate at different times in different parts of the world, due to which the Forex market operates around the clock 5 days a week. Trading on it is carried out via the Internet, and the interests of traders on individual exchanges are represented by intermediaries – dealing centers (or brokerage companies). It is they who organize the trading process and provide all the technical means of this process. Brokers accept online applications for opening certain positions on different currency pairs, collect them together and bring them to the market. As a rule, trading through dealing centers has a lower entry threshold, it is available to more people than direct access to the exchange. In addition, dealing centers perform some other important functions: they provide their clients with leverage, thanks to which they can receive a greater return from trading, or provide it with everything necessary for trading analytics. We will not go into all the intricacies of their work, it is better to consider each function of the dealing center separately.
Any dealing center is better viewed through the prism of several criteria, the totality of which is worth deciding on the choice of one or another for further work. Consider the main criteria.
Non-trading risks are risks associated with the possible bankruptcy of a broker, fraud, fraudulent misappropriation of your money and similar situations. There are many cases were under the guise of broker fraudsters attracted traders, after which they simply disappeared with their deposits. Given that all operations are conducted via the Internet, it is very difficult to find the ends later. As a rule, non-trading risks are inversely proportional to the broker’s notoriety. Well-known dealing centers care about their reputation, a lot of people can share their experience with them, it’s worthwhile for beginner traders to orient themselves towards such companies.
Of great importance in trading is the value of the spread – the commission in points that the broker takes for each of your transactions. It is clear that the lower the spread, the greater your profit. In addition to the size of the spread, the potential boundaries of its change matter. Sometimes a fixed large spread is better than a floating spread with a small lower border, but the possibility of increasing to any size. To better understand the role of this criterion, it is necessary to separately consider examples of trading with a spread.
Leverage is the ratio of the trader’s own funds to borrowed funds. It is believed that the greater the leverage – the higher the risks. This is not entirely true. The flexibility of opening new deals depends on the amount of leverage, and the level of risk already depends on it. The larger the range of leverage options offered, the better.
Trading Platform Support
The most popular Forex trading platform is MetaTrader 4, which is supported by almost all brokers. But this does not mean that other platforms do not exist or their use is not interesting to anyone. Some traders eventually find more suitable programs for them, and the more such programs are supported by a brokerage office, the better.
Account Opening Currencies
As a rule, most accounts with most brokers open in US dollars. However, some traders want to compensate for possible fluctuations in the exchange rate of their native currency against the dollar, which can be done by opening a second account in another currency, which is not always possible. Therefore, the more currencies a broker offers to open an account, the better.
Number of currency pairs to trade
There are both popular currency pairs with the largest volume of transactions and less popular ones. Moreover, from the point of view of speculation, the latter is sometimes even more convenient. The more currency pairs a trading center offers for trading, the better.
There are many similar criteria, but in reality, the determining factor is always the personal requirements of the trader and his feelings about trading. Therefore, before settling on a broker, you need to determine what exactly you need, and also try at least a few different dealing centers so that there is something to compare with. The longer you trade, the more difficult it is to change a broker, therefore, it is better not to be too lazy to make the right choice right away.
Our site has a powerful section – “Brokers rating”, in which you can choose a company according to the criteria.