The foreign exchange market accounts for over $4 trillion in the overall average trading values on a daily basis. This makes the foreign exchange market as one of the leading and the most profitable financial markets out there. As there is no proper central marketplace for executing the forex market activities, the traders are required to select a reputable forex broker towards helping them to conduct the day-to-day trading activities. There are several forex brokers out there in the financial markets. As such, it becomes highly important to select the particular broker who helps you in achieving maximum success when it comes to foreign exchange trading.
If you are considering doing effective forex trading, then here are some tips for you to select the most reliable and the professional forex traders out there:
- Check the Regulatory Compliance: In the United States, a reputed forex broker must have to be a member of the NFA (National Futures Association) and has to be registered with the United States CFTC (Commodity Futures Trading Commission) as the Retail Foreign Exchange Dealer and the Futures Commission Merchant. The NFA (National Futures Association) is regarded as an industry-wide, self-regulatory leading organization for the respective futures industry in the US. On the other hand, the CFTC serves to be an independent agency of the US government that is aimed at regulating the options markets and the commodity futures in the US.
Having a highly professional or flashy website does not imply that the particular broker is a member of the NFA or has been registered under the CFTC regulation. You can find such vital information about the particular broker in the given “About Us” section of the web page. Every country other than the United States has its own set of regulatory bodies with respect to ensuring the reliability of the forex brokers.
- Currency Pair Offerings: While there are several types of currency pairs available out there for trading, only a few of them are traded by ensuring the maximum liquidity. The majority of the reliable currency pairs include the US dollar forecasts like the USD/EUR, USD/JPY, USD/CHF, and the GBP/USD. A broker might be offering a variety of forex pairs. However, the most important factor that need to be considered while selecting a broker is looking into the specific currency pairs offered by him or her. This will help you in analyzing the overall success of your forex trading in the long run.
- Account Details: Each trading broker might be having unique account offerings including the following:
- Margin & Leverage: The participants of forex trading usually tend to have access to a series of leverage amounts on the basis of the specific broker, like the 200:1 or 50:1. Leverage is referred to as the loan extended to the margin account holders by the respective brokers. Leverage tends to work in favor of the trader with high winning positions as the potential for the profits might be enhanced greatly.
- Commissions & Spreads: A trading broker is able to make ample money through commissions & spreads. A broker who makes use of commissions might charge a specific percentage of the given spread –the difference between the ask price and the bid price of the given forex pair. However, there are several trading brokers who charge no value of commissions. Rather, they make money through the wider spreads.
- Initial Value of Deposit: Several forex trading accounts might be funded with a very small amount of initial deposit, sometimes even as low as $50. With proper leverage, the overall buying power becomes larger than the minimum value of deposit. This is the reason why forex trading attracts several investors from across the globe. There are several trading brokers offering mini, micro, and standard accounts that come with varying requirements of the initial deposits.
- Ease of Making Deposits & Withdrawals: Each forex trading broker tends to have specific policies for account deposits & withdrawals. The brokers might even charge the investors some fee for offering the specific deposits & withdrawals services.
Look out for the best forex trading broker for yourself to ensure maximum success!