How to evaluate a forex broker
How can I evaluate a forex broker and make sure I select a good one?
There are several things you can check before making a decision on a forex broker:
1. Is the forex broker regulated? The parent company of the forex broker must be regulated by at least one government regulatory body. Some of the regulatory bodies in the US include the US Securities and Exchange Commission, Commodity Futures Trading Commission, National Futures Association, Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation.
2. Does the forex broker have a good reputation? Before doing business with any forex broker, it is very important to check on their reputation. For example, how long have they been in business – it should be 3 years at the very least. Brokers who are successful and have been around for a while usually have positive news press on their websites. Find out what former and current clients say about the forex broker – there should be at least 20 reviews available to read.
3. Does the forex broker provide a natural trading environment? There are two major benefits that come from natural trading environment. First is that you get to benefit from true spread which can often be as low as ZERO. And second is that your stop/losses will get hit less often. For example, you should immediately be able to see price changes when submitting limit orders.
4. How much does it cost to withdraw money from your broker? Immediately before opening an account with a forex broker, call them and tell them that you are planning to withdraw money 10 to 15 times per month, and ask them how much it would cost. You may be surprised to find out that with such withdrawal activity, you may be losing extra $500 to $1,000 per month just in withdrawal fees.
There are several things you can check before making a decision on a forex broker:
1. Is the forex broker regulated? The parent company of the forex broker must be regulated by at least one government regulatory body. Some of the regulatory bodies in the US include the US Securities and Exchange Commission, Commodity Futures Trading Commission, National Futures Association, Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation.
2. Does the forex broker have a good reputation? Before doing business with any forex broker, it is very important to check on their reputation. For example, how long have they been in business – it should be 3 years at the very least. Brokers who are successful and have been around for a while usually have positive news press on their websites. Find out what former and current clients say about the forex broker – there should be at least 20 reviews available to read.
3. Does the forex broker provide a natural trading environment? There are two major benefits that come from natural trading environment. First is that you get to benefit from true spread which can often be as low as ZERO. And second is that your stop/losses will get hit less often. For example, you should immediately be able to see price changes when submitting limit orders.
4. How much does it cost to withdraw money from your broker? Immediately before opening an account with a forex broker, call them and tell them that you are planning to withdraw money 10 to 15 times per month, and ask them how much it would cost. You may be surprised to find out that with such withdrawal activity, you may be losing extra $500 to $1,000 per month just in withdrawal fees.
posted by northwind at
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