When you eventually decide to start trading currency pairs and have allocated a specific amount of your hard earned money for that there are many precautions to be made before investing.
One of the precautions is the choice of a reputable broker. The market has been abundant in brokerage services during the last years, or a decade. The market is so full of opportunities for both traders and trading platforms. This can be a good thing, as forex trading is a lot more accessible now than compared to the past. That said, it is still essential traders do their research before committing to a brokerage firm.
Forex brokers serve as an intermediary for private trading activities on the internet. How to make the right choice among these forex brokers? What question should you ask and get the answers to before entrusting your money to a trading intermediary? Let’s dive deeper into thai subject by explaining the two business models of Forex brokers.
This can be a good thing, as forex trading is a lot more accessible now than compared to the past. That said, it is still essential traders do their research before committing to a brokerage firm.
“Dealing” or “no dealing desk”?
The choice of a forex broker is based on quality of the services, the security of platform and reliability on the market. However, even before going into these details, the trader must make the choice of the type of broker. There are two main types of brokerages on the market: “dealing desk” brokers and “no dealing desk” brokers.
The difference between these two types of brokers lies in the processing of orders. While “no dealing desk” brokers transmit trading orders directly to the markets, “dealing desk” brokers process orders internally and act in their own name on the markets. Conflicts of interest can arise with dealing desk brokers when the trader’s positions go against the trend on which they are playing.
Focus on the quality of the site’s services?
In addition to the broker’s business model, trading services are also among the priority selection criteria for a broker. What platform does the broker use? The most common are Meta Trader4 and 5. Some brokers may have their proprietary software developed internally by their team of developers.
Are services such as trailing stop, scalping and hedging available on the site? What is the leverage ratio and types of accounts available?
How many currency pairs can I trade on the platform? The more pairs the more possibilities for you to diversify your portfolio. It’s a particularly important risk management strategy.
What languages are used on the site? What support is the broker ready to provide? Are there many channels of communication featured on their platform including phone, chatbot, email communication.
These few questions give a precise indication of the quality of the services offered by a broker.
You can find many brokers limiting their support only in English language while some like Bittradehouse dispose of multilingual support with over fifty languages. Read more about this broker in Bittradehouse Review.
The characteristics of the trading account are another significant parameter. Preferably, a trader should deal only with a broker that uses their country’s currency as the base currency of the account. The particularities of the account, in particular the minimum deposit required, the type of spread used, the leverage effect available, the mini lots and the bonuses offered are all other factors to scrutinize closely before choosing a broker. Without forgetting the security of the site, which includes the regulatory authority on which it depends, the date of creation of the broker and its registered office.