There are a lot of guides available on the internet which advertise the popular Forex brokers to new traders. However, in this article, we want to educate our readers about Forex brokers so that they can make the right decision themselves.
Importance of a broker
When it comes to comfort with brokers, financial transparency and regulation are vital. As the forex market volatility increases, we have seen undercapitalized brokers close their transactions without warning. This can cause serious confusion for traders. Understanding the financial situation will help you understand whether it can anticipate forex storms and volatility fx liquidity provider definition.
Importance of regulation
Whether a regulated brokerage firm determines who you can rely on if you are dissatisfied with resolving a commercial dispute, think of it as a form of insurance. Of course, we hope you don’t have to call the police, but you’ll be happy to see the policy available on a rainy day. Some of the most worrying calls we received from Forex traders were caused by an unregulated broker shutting down overnight or refusing to process withdrawals. Traders had no other place to turn when an unregulated broker refused to respect his side of the trade deal.
Account function
Each Forex broker offers a different account. The four areas to consider when comparing characteristics between brokers are Leverage and margin—fees and distribution; Initial deposit requirements; Easy deposits, and withdrawals.
Leverage and Margin
Depending on the broker, forex participants may have access to the leverage available in their margin account. For example, a trader with an account size of $ 1,000 can hold a position of $ 50,000 with 50: 1 leverage. Some brokers offer up to 200: 1 leverage. Leverage favors traders and gains positions as the potential profits increase significantly. However, the potential for loss also increases, and leverage can quickly destroy a trader’s account. Use leverage with caution.
Pip and profit
Forex quotes show two ratios: high ask prices and low bid prices. The two decimal places are often printed very large, and the smallest price increment is called a pip (percentage in points). P & L is calculated based on the number of pips taken or lost after the position was closed. All positions start with a small loss, as traders have to buy at ask prices and sell at bid prices. The distance between two numbers is called a spread.Traders need to choose a lot size for their forex positions.
Also, read What is pips in forex?
Currency pairs offered
Many currencies are available for trading, but few are the most-watched currencies, which are traded in the most liquid currencies. In addition to the EUR / USD and GBP / USD pairs above, the major pairs include USD / JPY and USD / CHF. Brokers can offer a huge range of Forex pairs, but most importantly, as a trader, offer the pairs you are interested in.
Customer service
Forex trading is open 24 hours a day, so you need to have your broker’s customer support always available. Also, consider whether it is easy to welcome a living person over the phone. You can quickly call an agent to find out what kind of customer service you have and your average wait time.
Summary
You don’t need to take the word of experts anymore. Our guide will enable you to easily decide and pick the better broker for yourself. Take a look at this article as well, markets.com minimum deposit.
