Nowadays the listing of Forex brokers is staggering and overpowering. You can find lots of Forex brokers online, how a trader supposed to choose? As a result, here is a listing of things you must do (for due diligence) before joining a Foreign exchange Broker:
First, you need to check on and see if an Economic Services office or corporation regulate a broker. A broker will often be required to provide the license number publicly on their website and have it readily available if a person asks for it. If you ask a broker to provide the registration number of their regulatory body and they refuse, it raises a red flag. Another method would be to check the regulatory body’s website and inquire or lookup for the broker. Remember that different regulatory bodies impose different rules for agents, so researching the requirements and reliability of the regulation is also a good idea.
Another method is to determine what other people have to say about Forex brokers and their experience with them. You can do this through community forums, independent broker review websites or person to person.
Type of broker:
Additionally it is essential to notice the sort of FX broker you are with: dealing desk agent or a non-dealing desk broker. Being a trader, you should decide what type of broker is the right one for your own personal trading strategy. The particular main difference is the fact that a dealing desk broker creates an internal market and trades against their clients. A non-dealing desk agent sends clients trades straight-through to their liquidity providers.
Liquidity Provider (LP):
If you wish to trade with a non-dealing desk broker (Or the STP + an ECN broker), then it’s a good idea to consider their liquidity providers. These are the financial institutions that process your trades. They also have an impact on the costs you pay to open trades. The list of the LP determines whether a Broker is a genuine or false ECN broker. The right ECN Forex broker is one connected to at least one well-known and reliable LP.
The list of services your chosen broker offers is another factor to consider. Some of the traders these days cannot live without specific FX trading tools. For example, you need VIRTUAL PRIVATE SERVER FIX API setup, Forex support, auto trading or Mobile trading. However, not all brokers offer the same services. As such, it is vital for you to consider what tools your strategy requires to apply and whether the broker’s policy allows your type of strategy.
You want your broker available and willing to help at all times. Test their support out via live chats, telephone calls or emails. Carrying out so will also allow you to inquire about the type of companies services they offer, also test their willingness to assist. Having a contact within your Forex brokerage can be very useful and knowing they are available to help in the event of any future problems is a critical factor to consider.