According to the Bank for International Settlements, the international currency market averaged a turnover of over $5 trillion every day, making it larger than the stock market. However, unlike securities such as stocks and bonds, there is no centralized market for currency trading. Anyone who wants to engage in foreign exchange must choose a broker to facilitate trading.
The forex market is so saturated that just looking at your options can be a major undertaking. There are many brokerage firms to choose from, from boutique firms like Fair Forex to big-name companies with an established presence in dozens of countries. Choosing a firm to trade with can be a daunting task, especially if you’re new to currency trading.
Here are a few things you need to consider when shopping for a brokerage firm:
1. Software
Online trading platforms have made currency trading more accessible to laymen and experts alike. When you open an account with a broker, you gain access to their proprietary platform and any other resources they might have.
For starters, you want to choose a platform that’s easy to use and understand. Currency trading is already complicated as it is, so you want to look for ways to simplify your trades. It could be a dashboard with a well-designed UI/UX, clear color differences, and large easy-to-read buttons. You also need access to tools to help inform your trading decisions as well as an alert system for instant notification.
2. Safety
When it comes to risking your hard-earned money, you need to make sure you’re dealing with a reputable broker. At the very least, the broker should be registered with an industry organization as well as a government regulator. If the broker has a presence in multiple countries, it has to be registered in every single country it does business in.
Proper registration ensures that the broker meets government regulations that were put in place to protect traders, investors, and the market. Government oversight also provides you with some protection in cases of fraud or manipulation. While the chances of fraud happening to you are slim, it’s best to have some legal cover since you’re dealing with the movement of money.
3. Service
Unlike the stock market which has set trading times, currency trading never stops. You can work anytime, anywhere you want, as long as you have access to the trading platform. Taking that into account, you’re going to need round-the-clock access to customer support through email, instant messaging, or a call.
Talking to a digital receptionist can only get you so far, so if the broker only offers limited live support, you might want to look at other options. Forex requires on-demand knowledge and troubleshooting, and if you can’t be assured for a live person answering your questions whenever you need it, you endanger your position.
Whether you’re a conservative or an aggressive trader, you need to choose the right firm that fits your needs and trading strategy. You have dozens of traders to choose from, so carefully weigh your options, and don’t forget to take safety, software, and customer service into consideration.