Whenever people look for some services, they always wish to find the best ones. The same is valid in the Forex trading industry, regardless if a trader is looking at selecting the best SA Forex brokers or at a broker in another jurisdiction.
The selection process should be the same and should focus on at least the following criteria: experience and regulation, types of trading accounts offered, commissions charged, and trading platforms offered.
Experience and Regulation
New brokers constantly appear in the industry, but being new does not mean the broker is bad. However, as a customer, you might value experience, especially in an industry such as online trading.
Therefore, as a trader looking for a Forex broker, you might like one with experience. Also, look for real reviews from traders that already used or are using the broker’s services.
Regulation is mandatory. Unregulated brokers should be avoided at all costs.
The financial authority supervises a regulated broker and must follow a specific process and fulfill certain conditions to market its services in the geographic region the financial authority is responsible for.
Types of Trading Accounts Offered
The ideal trading account should have ECN or STP technology, tight spreads, and be as fixed as possible. The FX market is quite volatile, and widening spreads during important economic data releases make opening and closing trades difficult. As such, transaction costs increase, and things like slippage are responsible for poor performance.
Brokers charge different commissions for the same process. But commissions do say something about the brokerage house.
Sometimes it is worth paying higher commissions than the average. It might suggest that the broker uses expensive technology to route the orders to the market. Also, it might suggest that the broker partnered with more than one liquidity provider, making it easier and faster to match its customers’ orders with other orders in the market.
Also, some commissions are charged at the moment a trader opens a position, while others at the closing. Moreover, not all commissions are trading-related.
For example, some brokers charge commissions for funding a trading account or for making a withdrawal. All these must be known in advance, and the broker with the best combination of low commissions and optimal technology should attract more clients.
Trading Platforms Offered
Some brokers have developed an in-house trading platform. While it sounds great, it may not be what the trader needs.
For instance, if one is used to the MetaTrader platform, the most popular trading platform for retail traders, it may be difficult to learn using a new trading platform. Many traders avoid the hustle of doing so.
Therefore, most brokers use either MT4 or MT5 as dedicated web-based and mobile platforms. Also, the ability to open and close trades when on the go is highly valued by traders in the 21st century.