Choosing a reliable and trustworthy forex broker can be both easy and difficult. In any country, there are certainly many brokerage firms to choose from. However, the level of forex broker fraud cases is still very high. This means that not all brokers provide trading services according to the standards they should.
Therefore, consider these 9 things before choosing a forex broker:
- Clarity of identity
- Active regulatory status
- The office address is valid
- The domain address is clear and safe
- Offer trading services according to needs
- Does not limit trading techniques
- Responsive customer service
- Beware of "too good to be true" promotion
- Have positive reviews
If the nine things above have been fulfilled by the broker, then you can include the broker in the options. The following is a complete explanation regarding the 9 ways to choose a broker for forex traders.
1. Clarity of Identity
First, research the identity of the forex broker in depth. Find out the name of the company that covers it, when it started operating, and the location of the office.
Sometimes, the name of a broker may not match the name of the overseeing company. Typically, brokers will disclose this information at the bottom of their website. Take ThinkMarkets, for instance; it states that it's regulated by the FCA under the name TF Global Markets UK Limited.
To verify this, you can search for ThinkMarkets on the FCA website using either its name or registration number. If the company's name appears in the search results, the information is valid. It's worth noting that broker logos may not always include the broker's name. To confirm this, you can visit the broker's website. Additionally, reputable brokers will usually inform users of any changes to their name or logo.
When considering a broker's track record, it's advisable to opt for one with at least 8-10 years of experience, ideally. Brokers with less experience may still be finding their footing, which could affect the availability of instruments, trading platforms, or service quality. '
However, even a broker with a decade of experience may not necessarily be good. To verify a broker's reliability, you can check broker's achievements, reviews, and trading application ratings.
Reputable brokers often have offices in developed countries and are regulated there. For example, HF Markets has offices in the UK and is regulated by the FCA. However, brokers based in developing countries aren't necessarily inferior. As long as a broker is properly regulated and has a solid track record, it's likely to be trustworthy.
2. Active Regulatory Status
Just like doctors who are required to have a practice license, forex brokers must have regulations to operate. Major regulatory bodies that commonly license forex brokers include FCA, ASIC, CFTC, CySEC, FSA, FINRA, FSC, IFSC, IIROC, DFSA, BaFin, and NFA.
Usually, brokers will list their name and regulation number on their respective websites or in the "Legal" section. If a broker does not list it, then you should be suspicious.
However, it doesn't stop there; you should validate it to confirm whether the broker is truly regulated. Many brokers claim to have certain regulations but are not registered when checked with their regulator.
You can visit the official website of each regulatory body to perform the verification.
3. The Office Address is Valid
Generally, brokers will display their head office address on their "Contact" or "About Us" page. Some brokers also have branches or representative offices in various regions which you can find on their websites.
Knowing your broker's office address is an important step in ensuring that you are dealing with a legitimate and reliable entity. A clear office address indicates that the broker has a real physical presence, allowing you to contact them directly if you have questions, complaints, or need technical assistance.
You should be careful if you find a broker who only lists a virtual address or PO Box as their office address. However, you still have to cross-check the broker's office address because there are individuals who often enter fake addresses. Apart from visiting directly, you can try searching on Google Maps or Street View to be sure.
See also:How to Choose Forex Brokers Based on Your Need and Where You Are From?
4. The Domain Address is Clear and Safe
The clarity of the domain address is an important factor in assessing the authenticity of a broker website. A clear domain usually reflects the professionalism and transparency of the broker.
For example, official domains typically include the broker company name or their trademark, along with domain extensions related to the region or country, commonly ".com" for companies. Avoid websites that use strange or irrelevant domains to the financial industry, as this could be a sign that the website is not legitimate or even a scam site.
Furthermore, make sure to check for the presence of "https://" in the domain address, indicating that the website connection is encrypted and safer for users. By ensuring the clarity of the domain address, you can avoid the risk of fraud.
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5. Offer Trading Services According to Needs
Trading services are the "products" of brokers. To entice consumers to buy, brokers must offer comprehensive trading services at competitive prices. Facilities and trading services from brokers that you can consider include:
- Complete trading instruments: at least brokers can provide several types of trading instruments. If related to forex, choose brokers that provide major to exotic pairs. Usually, brokers also provide other assets such as stocks, commodities, or cryptocurrencies.
- Easy-to-use trading platforms: a commonly used platform is MetaTrader, but it doesn't matter if brokers use their own platforms. As long as the platform remains easy to use and can execute orders quickly.
- Variety of deposit and withdrawal options: choose brokers that offer many payment methods for deposits and withdrawals. Because each trader has different preferences based on their needs and availability in the country or region where they live.
- Availability of demo accounts: this is important because you can try the broker's platform and services on a demo account before depositing with real money. Demo accounts are also needed to test strategies before moving to a real account.
- Low spreads: the lower the broker's spread, the less money you need to spend on trading.
- Swap-free accounts: for the majority of Muslim countries, swap-free or Islamic accounts are important to avoid traders from interest rates that are not in accordance with Sharia principles.
- Leverage: choose brokers that set leverage at least 1:100 to 1:200 so you have more flexibility in opening positions. Many brokers offer leverage up to 1:3000 but you have to be careful.
6. Does Not Limit Trading Techniques
Each trader has a different trading style and strategy, according to their goals, risk tolerance, and personal preferences. By not limiting trading techniques, brokers allow clients to explore and apply various trading approaches according to their needs.
Apart from that, limiting trading techniques can also be a detrimental action for traders because it can hinder your creativity in developing effective trading strategies.
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7. Responsive Customer Support
When traders experience difficulties, the broker's customer support is the front guard who will serve. Therefore, a reliable broker must have responsive, communicative, and responsive customer service features. This feature can be in the form of live chat (usually on the broker's trading website or application), telephone, WhatsApp, email, or Telegram.
Customer support must be available during active trading hours, from Monday to Friday. In fact, there is a customer support broker who is also active during the weekend.
8. Beware of "Too Good to be True" Promotion
Forex brokers often hold bonuses or promotions to attract customers. This is normal because traders can also feel the benefits. However, beware if the broker's promotions are excessive because there is likely an intention to deceive.
For example, a broker promises 100% profit or a $1,000 bonus that can be withdrawn without trading. If the broker intends to cheat, everything must be done to trap the victim.
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9. Have Positive Reviews
Reviews given by previous clients are important for you to pay attention to because they relate to their personal experiences at the broker. You can easily find broker reviews and ratings on the internet, such as Trustpilot or BabyPips. But be careful not to get trapped by fake reviews.
If you plan to use a mobile trading application, don't forget to look at the rating first on the PlayStore or App Store. Also, read the reviews there. If many people complain about not being able to withdraw, the trading platform often has errors, and the stop loss often triggers itself, then be careful. It's better to look for another broker with better reviews.
Best Forex Broker Recommendations
Based on the explanation above, several brokers meet all the criteria and are therefore ideal for you:
- FBS: An international broker offering comprehensive forex trading services and various attractive promotions.
- Exness: A low spread broker favored by traders in many countries due to its accurate execution.
- IC Markets: An ASIC-regulated ECN broker offering outstanding VPS (Virtual Private Server) features for its clients.
- Octa: A world-renowned forex broker that often provides attractive bonuses and holds trading contests with cash prizes.
- Pepperstone: A broker with over 10 years of experience and high ratings on various review sites.
- RoboForex: An award-winning broker offering low spreads as low as 0.0 pips.
- XM: A professional forex broker with comprehensive trading services, responsive customer support, and Islamic accounts for Muslim traders.
- HF Markets: A CySEC-regulated broker offering low spreads and high leverage of up to 1:2000.
- Admirals: A broker with over two decades of experience, with 16 offices worldwide and customer support available in multiple languages.
- AvaTrade: A broker holding 8 regulations that guarantee trading security for all its clients.