Critical Features for Any Forex Broker! When you want to do business with a broker, don’t forget that they are there to serve the customer, and it pays to shop around – just like any other purchase. Forex brokers tend to be very competitive on various features, and with a bit of research, you can get a lot more than you realize. Below is a short list of some of the most important criteria when choosing a Forex broker:
While this seems a no-brainer, many new traders do not know about the various regulatory bodies. If you are using a Forex broker, it needs to be regulated. Also, you should be aware of where it is held. This is one of the things most people overlook. As a general rule, you will want to see a country known for being business-friendly (at least in terms of the rule of law) as the country of registration. Critical Features for Any Forex Broker
One of the most popular places to regulate is Cyprus. The Cypriot authority is a little more lax on its Forex trading laws. By holding there, you can claim that you are “regulated in an EU country,” which is technically accurate. But having said that, you could claim to be “regulated in North America” by being registered in Mexico. This implies the same stringent protections you get in the US or Canada. Common sense sees the folly in that argument.
Believe it or not, not all Forex brokers offer to chart. This is becoming less of a problem, but some don’t. They generally provide an ECN or Electronic Communication Network and sell an add-on for charting, such as NinjaTrader. Provision of proper charting is a sign of a broker’s integrity – failure to provide this is a sign that they may be less-than-honest. Critical Features for Any Forex Broker
Pairs – Critical Features for Any Forex Broker
Not all brokers offer the same currency pairs. Some offer over 100, while others only provide the 20 most common teams. One of the pairs that surprise people the most in this regard is CAD/JPY. Most traders assume the cross-pair would be offered since the Canadian dollar and the Japanese yen are significant currencies. All brokers will be different, and a diligent review of available trading pairs is essential. The last thing you want to do is turn around and close out an account immediately because of an errant mistake.
Leverage – Critical Features for Any Forex Broker
Depending on what part of the world you live in, leverage can vary. Power allows you to trade large amounts of currency with a small deposit. Some brokers offer as much as 700-1 leverage, and depending on your trading style, power can be good or bad.
By 700-1, you can control $700 for every $1 you deposit. Because of this, it can supercharge your returns and losses. Therefore, leverage is something that should be used sparingly.
It should also be noted that the United States regulatory authorities recently cut the amount of leverage Americans can use to 50-1 for major pairs and 20-1 for crosses.
Analysis – Critical Features for Any Forex Broker
When learning to trade, having a technical analyst available to read is always helpful. Some brokers are very generous with their offerings regarding this kind of thing, and many are now employing professional technical analysts that post newsletters daily. This can be very helpful for the new trader.