How to choose reliable foreign exchange brokers?

The average daily trading volume of foreign exchange market is more than $5trillion, which is the largest financial market in the world. Since there is no central market in the foreign exchange market, traders must choose foreign exchange brokers to help them carry out their trading activities. The number of foreign exchange brokers is increasing, and choosing the right foreign exchange brokers needs to be carefully screened in a large number of magazines and Internet advertisements. The following small part discusses five considerations when choosing foreign exchange brokers in today's competitive foreign exchange market.
01 regulatory compliance
In the United States, for example, a reputable foreign exchange broker must be a member of the National Futures Association of the United States and be registered as a futures broker and retail foreign exchange trader with the U.S. Commodity Futures Trading Commission. The National Futures Association of the United States is an industry wide self-discipline organization in the futures industry, which creates rules, processes and services to protect the integrity of markets, traders and investors and help members fulfill their regulatory responsibilities. The CFTC is an independent government body that manages the commodity futures and options markets in the United States. The CFTC's mission is to "protect market users and the public from fraud, manipulation and abuse related to the sale of commodities and financial futures and options, and to foster open, competitive and financially sound futures and options markets."
A flashy or professional website cannot guarantee that the broker is a member of the National Futures Association of the United States, or that it is regulated by the U.S. Commodity Futures Trading Commission. Brokers who are members of the National Futures Association and are subject to the rules of the FCTC will state this and its NFC membership number on their website (usually on the "about us" section and each web page). Every country outside the United States has its own regulatory body. Due to potential concerns about the safety of the deposit and the integrity of brokers, accounts should only be opened in companies subject to appropriate supervision.
02 account details
Each foreign exchange broker has a different account, including the following factors:
Leverage and margin: foreign exchange participants can obtain various levels of leverage, depending on brokers, such as 50:1 or 200:1. Leverage is a loan that brokers make to margin account holders. For example, with a 50:1 leverage, traders with an account size of $1000 can hold positions worth $50000. Leverage is good for traders because the potential for profit is greatly enhanced. However, leverage can quickly destroy traders' accounts, as the possibility of loss has also been amplified. Levers should be used with caution.
Commission and difference: brokers make money through Commission and difference. Brokers who receive commissions can charge a specific proportion of the spread, which is the difference between the purchase price and the selling price of the currency pair. However, many brokers claim that they do not charge commissions, but make money by large spread. For example, the spread can be a fixed spread of three points (one is the smallest unit of changes in foreign exchange prices) or it can vary depending on market volatility. The euro / USD quotation is 1.3943 - 1.3946, with a price difference of 3 points. This means that once market participants buy at 1.3946, the value of the position has shrunk by three points, as it can only be sold immediately at 1.3943. So the bigger the spread, the harder it is to make a profit. The spread between popular currency pairs such as euro / USD and pound / USD is usually smaller than the pair with smaller volumes.
Initial entry: most foreign exchange accounts require very little initial entry, or even as low as $50. Of course, leverage, position capacity is far greater than the minimum entry, which is one of the reasons for foreign exchange transactions to attract novice traders and investors. Many brokers provide standard, mini and micro accounts, with different initial deposit requirements.
Access to gold: each foreign exchange broker has a specific account access policy. Brokers may allow account holders to pay or deposit online through credit cards, ACh or PayPal, wire transfers, promissory notes or commercial or personal checks. Cash can usually be made by check or wire transfer. Brokers can charge any service.
03 types of currency pairs provided
Although there are a large number of currencies available for trading, only a few have received most attention, so the transaction is the most liquid. The main currencies are USD / JPY, euro / USD, USD / Swiss franc and pound / USD. Brokers may offer a large number of currency pairs, but most importantly they will provide currency pairs of interest to traders or investors.
04 customer service
Foreign exchange transactions are carried out 24 hours a day, so customer support from brokers should be available at any time. Another question to consider is whether it's easy to talk to people, not with time-consuming, often frustrating automated operators. When considering brokers, making a short call will give you an idea of the type of customer service they offer, the waiting time, and the ability of representatives to answer questions about price differences, leverage, regulatory and company details. These details include the duration and volume of foreign exchange brokers (larger brokers usually get better prices and execution).
05 trading platform
Trading platform is the gateway for investors to enter the market. Therefore, traders should ensure that the platform and any software are easy to use and intuitive, and that there are various technical and basic analysis tools, so that traders can easily enter and leave the venue. The last point is particularly important: a well-designed trading platform will have clear "buy" and "sell" buttons, and some platforms will even have a "panic" button to close all open positions. On the other hand, poorly designed interfaces can lead to costly order input errors, such as inadvertent warehouse building rather than closing, or short when you plan to do more.
Other considerations include custom selection, order input type, automatic transaction selection, policy builder, backtracking test, and transaction reminder. Most brokers provide free simulated accounts so that traders can try out trading platforms before opening accounts and entering the funds.
conclusion
If you are confident in foreign exchange brokers, you will be able to invest more time and energy to analyze and develop foreign exchange strategies. Before choosing a foreign exchange platform, it is helpful to do a little research first, which can improve the chances of foreign exchange investors to succeed in the competitive foreign exchange market.