Choosing the right forex broker can be a daunting task, especially if you are new to trading currencies. Use the following criteria when determining which broker is best suited to your needs.
What to Look for in Forex Brokerages
Choosing the right forex broker can be a daunting task, especially if you are new to trading currencies. Use the following criteria when determining which broker is best suited to your needs:
In forex trading, the “spread” is the difference between the bid and the ask price and basically refers to the commission that your broker will take in exchange for executing your purchase or sale.
Spreads can be beneficial for forex traders because unlike stocks (which usually charge a flat-rate fee no matter how many shares are being bought or sold), forex traders gain no advantage by buying or selling much more currency than they can afford.
However, high spreads can quickly eat into your profits—just a few cents difference spread over a large number of trades can make a big impact.
Don’t be afraid to “shop around” for brokers and be sure to ask about fees and spreads before making your final decision.
2. Leverage offerings
Most forex trading is done “on the margin,” meaning that your broker will extend you “leverage” as a ratio to help you make more profitable trades.
Higher leverage will allow you to make more money trading with less money in your account, so searching for a broker that will extend at least a 100:1 leverage ratio, meaning that for every $1,000 you put into your account, you can trade with $100,000 worth of currency power.
Having trouble finding a broker that will offer you the leverage you need? A bad credit score or a lack of credit history may be the culprit.
Check out our guide to boosting your credit score to get started on the path to better credit.
3. Ease of platform use
Forex trading is all about making quick movements and tractions—the value of a currency can change at a moment’s notice, meaning that you need to make every second count.
Trading platforms that are laggy, slow, or difficult to understand can seriously impede your trading, so watch a few YouTube tutorials and reviews to make sure you understand a platform before you commit desktop space and money to its broker.
4. Customer service offerings
A great customer service team can help you set up a platform, make your first trade, and can even direct you to educational resources to enhance your trades and investments.
Look for a broker that offers extended customer service hours and at least two outlets to contact their team in the event that you need assistance.
Compare the Best Forex Brokers
Compare Benzinga’s picks for the best forex brokers in the United States.
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