Choosing a good trading intermediary for your Forex trading business is the first step toward successful and profitable trades in the long run. If you are just stepping into the currency trading world, you will notice the insane number of brokerage companies on the market. So how to find the best for your business? What to pay attention to when making your choice. Here are some tips.
What are the costs of a forex broker?
The costs of a forex broker are divided into three major categories. These are:
- the spreads
- trading commissions
More specifically, each category of fees remunerates a particular service provided by the broker:
The spread represents the difference between a currency pair’s buying and selling price at any time.
In a way, it is the trading margin of the broker who buys many currencies from his liquidity providers (banks) and resells them with a surplus to the trader.
The commission corresponds to a fixed amount paid to the broker for purchasing and selling many currencies (1 lot = 100,000 units). It represents the remuneration of the service of the broker who transmits the order to its liquidity providers.
Swaps represent daily financing interest paid to the broker as compensation for funds used for leveraged trading. Click here for more info: best forex brokers in nigeria
Finally, count on small administrative charges and possibly commissions on fund withdrawals.
You must compare the average spreads between market brokers on different currency pairs to choose the best broker.
On their Standard accounts, some brokers display an average spread of only 0.6 pips on the EUR/USD pair, while others display up to 1.7 pips! Examining average spreads is, therefore, an essential exercise in finding the best forex broker in terms of pricing.
Does a forex broker only offer to trade forex?
Most forex brokers offer to trade currency pairs, but also CFDs and other assets. One of the most popular offerings CFD trades is Mega markets. So read Mega Markets review to learn more about their trading conditions.
Most brokers also offer to invest in stocks and ETFs live, alongside currency trading. This is particularly the case with XTB and CMC Markets, which offer direct investment in shares listed on European, American, Asian and Australian markets.
Does a forex broker offer investment advice?
No, a broker cannot offer investment advice to his clients because European and French rules prohibit them from avoiding conflicts of interest.
However, a serious forex broker must offer its clients training content and market analysis to enable them to master trading. Other brokers offer their clients to “copy” the trades of other expert traders through social trading.
What is the best forex trading platform?
There is no “best forex trading platform,” but rather, one platform is more suitable than another depending on the trading strategy envisaged, your budget, and your trading plan. Also, if you are a complete beginner, prioritize the brokers that offer demo trading mode and free educational resources so you can enter the market with full confidence and with no hassles.