Finding a Forex Broker That Helps You
Anyone looking to trade forex will need to use a broker to trade. The reason for this is that the average person does not have access to the forex market and can only gain access through a broker. It is important that you find a forex broker that is willing to help you make a profit from the market. To find these brokers you have to consider a few points such as the regulatory body they adhere to, what spreads they charge and how approachable they are.
Forex Broker Location and Regulation
The forex market is largely unregulated and this is one point that makes many people wary of trading. However, a number of countries have looked to put certain regulations in place which affect any brokers based in their country. These regulations look to protect the trader and put a stop to fraudulent brokerage companies. It is best that you know where the broker you are going to use is located and the regulatory body of the country. There are six countries that have set regulatory boards that you should know about:
- Any brokers based in the USA are under the regulatory control of the CFTC and the NFA.
- Brokers located in the UK are under the control of the FSA.
- Brokers in Australia are regulated by the ASIC.
- All brokers from Switzerland are regulated by the SFBC.
- French brokers are regulated by the AMF.
- German brokers are regulated by BaFIN.
The Spreads Being Charged
Forex brokers do not charge a commission on the trades you complete. However, they do charge a spread which is where they make their money. This spread can affect the profits you make and the trading strategies that you can easily use. It is important that you find out what the spreads are and how they are being charged. Retail brokers generally offer fixed or variable spreads with the variable option being the more popular.
Variable spreads will change with the market conditions. When the market is liquid the spreads are generally tighter. However, there are times when the broker will widen the spread when a lot of trading is going on to make more money. Fixed spreads are set to a single price and will not change at any time. There are certain traders that find fixed spreads to be better because it is easier to factor them into trading plans.
How Approachable is the Broker?
When you look at forex brokers you need to consider how approachable they are. You should look at the different ways that you can contact them and test their response time. It is very important that you can contact your broker at any time because you may be trading at any time. You should also use a broker that can be contacted easily and through a variety of different methods.
When you test the response of your broker you need to test technical support and customer support. These are two very different areas, but they both need to have a good response time. You do not want to wait for the broker if you are having a problem with withdrawals. You also do not want to wait for the broker if you cannot get onto the trading platform.