In my last few articles, I detailed some of the best practices with regards to starting out as a FOREX trader, then some of most, if not the most common methods used by traders. In this article, which is by far the most important to some degree, as without these guys, you won’t be trading anything at all. Yep, you’ve got it, your broker. These are the guys who will execute your trades for you, but it’s important to make sure that the broker that you select, has the right aspects, of which, I have highlighted the top 5 key aspects to look for from a FOREX broker.
1 – Low Spreads.
Basically, this is where your direct cost of placing a trade with a broker, it is where they make their money. Therefore, it’s important to realize, that to get to keep more of your profit, you want to make sure that the broker you are using, is taking more than they should. In fact, with most brokers now and it becoming so crowded in the brokerage market, that it’s very common to find some very competitive spreads indeed.
2 – Low Minimum Lot Sizes
In the not too distant past, lot sizes; the minimum amount you can trade, were at the time quite large and prohibitive for all but wealthy traders. These days, more so in the last 10 years, lot sizes have become very small. This is important, as you want to, certainly with a new broker, try them out, to see if they fit. More so, it’s important to be able to use your balance better, by being able to place smaller trades, risking less and therefore, being in control of your balance and trading better. Of course, as you grow as a trader and in profit, you can increase your lot sizes, but at the start, regardless of how experienced you are, with any new broker, you want to keep the trading light and lot sizes small to begin with.
3 – Fast Order Execution
This is important. When you place a trade, with the FOREX market moving so incredibly quickly, you will want your trade, marked and opened at the price point that you were quoted, not above or below. Therefore, it’s important to make sure that your broker has the ability to give you very fast prices and keeps to them. Conversely, when you close a trade, you don’t want to be looking to close a trade and find that the price you closed it at, wasn’t any where near the price you expected. Granted, no broker can guarantee a price, but you always must expect that when you place a trade, it’s going to be very close to where you wanted it to be.
4 – Extensive Tools
Only a few brokers provide the sorts of professional tools you need as a trader, if you’re going to take this seriously. There are many brokers out there, possibly thousands, but only a handful have the resources, to provide you with the same resources. I would recommend that you choose a broker that offers an easy to understand trading environment, with all the professional charting tools – either by download or online directly, to enable you to effectively make accurate analysis of those charts. Further more, I would also look to a broker, that provides a good level of additional resources, such as news feeds, training, education, support and more. Brokers have become to realize over the years, that by keeping you skilled, supported and giving you the right tools, keeps you trading. By keeping you trading, they make money on the spread from your trades. Essentially, it’s good for you and it’s good for them.
5 – Adjustable Leverage
Most brokers, but not all of them, offer adjustable leverage. This is usually selected when you place the trade, or when you are looking to make an adjustment, in terms of adding to a trade. Sometimes, depending on your ability, your balance or even the market in general, you should be able to either change the leverage on each trade, or call up the broker to adjust the leverage. Usually, what is becoming increasingly common, is that brokers, will evaluate your ability in trading depending on what account you open and your leverage is based on the type of account you have – this is the most common way brokers work, more so online. Almost 100% of the time with new accounts. They will place you on a low leverage, to protect you from any great losses. When you become more experienced, usually you can call the broker and they will evaluate your trading and provide a different, higher leverage. Remember, they are there to help you by keeping you safe and trading.
Finding a broker can be hard, there are many to choose from. In as much as I know personally that it’s tricky finding the right broker, I do know from experience that eTorro are my personal favourite. They not only tick all the boxes above, but they do so in such a big way. Furthermore, they also have a massive social trading network of live profitable traders, whom you can not only see how well they are doing, but what they are trading, how and much more – you get to see some of the most successful traders online and work with them, combined with the exceptional training in trading, forex and analysis AND the fact that you can start by opening a simple demo account to try it all out for yourself without risking your own money, you really can’t go wrong.