As a retail trader, no one can open a trading account on their own in the Forex market, and he must take the help of a broker to do that. But choosing the best broker may not be easier as it may seem in the beginning. A trader must be conscious during the selection of the right broker as the marketplace is full of fake brokers. To save newbies from being exploited, today, we will discuss the best ways to choose the right broker.
Ways to select the best broker:
Before choosing a broker, we have to ask them about the spread and commission they will take as their cut from our profit. Spread indicates the difference between the asking price and the bid price. Generally, most of them take the spread as their commission and do not desire any extra. But, some of them ask for the extra service charge. If we can be clear about this, the execution of trades will be heavenly for us.
Leverage is a great tool that helps investors take the opportunity of making a higher investment with a smaller deposit. Generally, a trader may get 1:10 leverage or more than that based on the ability of their selected brokerage house. Leverage can work as a two-way sword, and an investor must be careful of the utilization of it. Taking too much leverage may increase the risk to a great extent. Feel free to visit the website of Saxo and you will notice that they are not offering insane leverage. They know that leverage can act as a double-edged sword. Those who have experience in dealing with IPO know the extreme risk associated with high leverage trading account. That’s why you should always trade with rational leverage and trade in a risk-controlled environment.
A trader should realize the fact that he is taking the leverage as a loan from the investor. He is bound to return the money, whether he makes a profit or loss. When a great amount of leverage is taken, the account of the trader takes the negative value. If this type of situation continues for a long time, the investor may have to get his trading account deleted very soon. Therefore, rookies are advised to utilize the leverage option at their own risk, even if the broker has the greatest opportunity to provide them with a large amount of leverage.
Beginners must check the necessary certification and membership of the brokers by visiting their professional websites. It is often found that fake brokers cheat newbies by taking their credit card information. To be free from this issue, one must check the necessary certification and the membership of the brokers in their websites. Generally, they get membership or legal documents from the regulatory bodies like NFL or FCA. If we find he belongs one, we may easily take him to execute trades on our behalf of us. Otherwise, you should leave him at once and try to continue your search to find the right broker for you.
A trader may provide a direct call and check whether the brokerage house has professional customer support or not. If we find one, we may easily take the service of them. One should ask them different kinds of questions and check if they are providing the correct and cordial answers are not. When everything is found positive, one may take the service of that specific company.
Sometimes it is also found that though the customer support is nice, the after service is not up to the mark. To be free from this kind of dilemma, you must check customer reviews regarding a specific brokerage house searching on Google.
In conclusion, we can say that beginners suffer a lot because of the exploitation of the brokers if they choose the wrong one. But you should be careful from the beginning of your Forex career and must discuss with the experts to choose a perfect broker.