Is Your Forex Broker Honest?
As Forex traders we cannot live without them! They are our magic bridge between humble living and the vast world of Forex market. And in order to survive in Forex market you have to make sure that the Forex broker you have picked is honest and reliable.
To everyone’s regret, not all brokers are reliable though. So in order to avoid “I can’t live with or without my broker” situation you have to check every term and condition of the Forex broker you have picked. Don’t let any condition or extra fee catch you by surprise. The more you know about your Forex broker, the better!
In my opinion, the first thing you should check is support. While trading you can run into technical problems, find yourself asking trading questions or even be unable to locate your trading history. Broker should provide a fast and professional support to every question that might arise via chat, email or phone call. I think the best way to check this is to open a demo account and see how fast support answers your requests. After all, if a Forex broker doesn’t take a good care of potential traders what will happen when you turn into a real client? A professional Forex broker will give an outstanding support, especially in technical area.
Second thing that I would check in a broker is leverage options. Just a reminder for those who forgot – leverage is like a loan. For example a leverage of 1:100 will turn your $1000 into $100,000. But, of course, never ever forget that there is a great risk involved with this trading option. I suggest not drooling over high leverage option. It might just be a perfect trap where you loose all your savings!
One more thing that is crucial in choosing the right Forex broker is the spread. You might ask why to care about spread? If the spread is how Forex brokers are getting paid for their service why would I care about it? Just a quick reminder, spread is a difference between buying and selling price. So the bigger the spread is, the more the exchange rate has to rise in your favor to break even. To make things short – avoid high spreads! Whenever you see spreads higher then, let’s say, 6 pips, RUN!
Let’s not forget the trading platform. There are two options web-based and download trading platforms offered by Forex brokers. Which one is better? This is something you should decide for yourself. Whether download or web-based, make sure that the trading platform has every trading tool you need, including charts, news, available currencies etc.
Just to summarize – investigate, interrogate and cross-examine your broker before you jump in! Test your Forex broker with demo accounts and make sure to read those extremely boring terms and conditions. Oh, and one more thing, don’t miss anything written in tiny letters in beige font – it might just be another “invisible” extra fee.
