As a novice forex trader, you are surrounded by a plethora of trading tips, secrets, strategies, and techniques. While you can find some great advice on what you can do to increase the profitability of your trades, many miss one very important point that can, quite literally, make or break them. What’s that point, you ask? It’s choosing the best broker for forex trading, which, on its own, is one of the most basic yet vital things each trader should double and even triple-check.
But how does one do that? Will a couple of positive online reviews and testimonials suffice to help you pick the best forex broker for beginners and advanced traders, too? Keep on reading to find out!
Why to Choose the Best Broker for Forex Trading?
There is a short and a long answer to this very important question. The short answer is, why not? Why would you want to settle for anything that’s less than the best?
But there’s also a longer answer to the question, which highlights the role of the broker you pick for your trading journey in the journey itself. Your broker is basically the window that connects you and your devices to the vast world that is the foreign exchange market.
All the nitty-gritty details that there are about your forex broker can make your trading journey smooth sailing or a living hell! So, weighing your options before you get into anything more serious would be a wise choice.
How to Choose the Best Forex Broker?
Now that we’re on the same page about why you should pick the best broker for forex trading, let’s get into some measurable factors you can assess to help you with this process.
Of course, depending on your personal needs and requirements, you should put more or less weight on these factors. For example, if you’re looking for the best forex broker for scalping or day trading, you should definitely give special consideration to the fee structure and the spreads and commissions that you’ll be charged.
1- Security Measures
While it’s important to ensure proper security measures for your entire online presence, it’s even more vital to do so when it comes to financial markets like forex, where you can lose everything because of inadequate safety features.
So, the first thing you’d want to look for on your quest to find the best broker for forex trading is whether or not they’re gonna keep your personal and financial information safe and intact.
Look for 2-factor authentication and code encryption, and check their regulatory compliance, which brings us to the next point.
2- Acceptable Regulation and Credibility
As mentioned before, you should pay extra attention to the regulatory compliance and credibility of your brokers of choice. All financial brokers should abide by a set of rules that depend on jurisdictional and international trading laws.
For this purpose, special legal bodies have been established. These firms are called regulators; they oversee broker activities and ensure trades are conducted ethically. They also aim to minimize financial fraud.
Based on how strict they are and the level of “security” they offer, regulatory bodies are divided into 3 categories: tier 1, 2, and 3. In this ranking system, tier 1 regulations are the most credible, offering strict observation, anti-fraud measures, and negative balance protection.
Despite all that, your broker’s regulatory compliance is not the only thing you can look for for security reasons. Especially if you’re looking for the best offshore forex broker for us clients or clients from any other countries, you might not be able to get tier 1 regulation all the time. In such cases, you can check client reviews and testimonials to check how credible a brokerage is.
3- Low Spreads and Commissions
The fee structure is the third element you need to look for in your perfect forex broker. Generally, FX broker fees are divided into two major types: spreads and commissions.
Spreads are calculated from the difference between an asset’s bid and ask prices. The bid price is basically the highest price at which the broker is willing to buy the asset from you. On the other hand, the ask price is the lowest price the broker is willing to sell that same asset to you.
The difference between these two creates spread, which is the main source of income for most brokers. The lower these spreads are, the better it is for you, especially if you’re looking for the best forex broker for small accounts.
Moving past spreads, brokers might also charge their clients commissions per every lot that they trade. As with any other type of fee, the lower the commissions of your broker of choice are, the better it will be for you.
4- Diverse Asset Offerings
Ideally, your broker of choice should provide a vast range of assets you can trade with. If you’re looking to trade forex, they should offer all major and minor currency pairs, along with some decent exotic pairs that can fulfill the needs of risk-takers.
Aside from appealing to a larger audience, which in itself might require the broker to abide by stricter regulations, this asset diversity provides traders with the opportunity to better implement their risk management techniques and strategies. And who doesn’t want that?
5- Decent Account Types
Next on our list is the type of accounts your broker of choice offers. While they might be called different things by different brokers, forex trading accounts usually fall into one of the following categories:
- Standard accounts: Also known as classic accounts, these offer high leverages, low initial deposit requirements, and rather accurate quotes. Despite that, they usually have higher spreads compared to other account types.
- Mini accounts: These accounts have an initial deposit reduced by ten times. Respectively, the trading lot on these accounts is also lessened to a micro lot, which is 10,000 units of currency pairs.
- Micro accounts: Very similar to mini accounts, micro accounts also have reduced initial deposits and, respectively, trading lots. However, instead of reducing those factors by 10 times, they do it by 100.
- Cent accounts: If you go one step further than you did with micro accounts and reduce your trading measures by 1000 times, you’ll get a cent account. These accounts are mostly used by novice traders who are too scared to enter the market “for real.”
- ECN accounts: These accounts are the most popular among professional traders. Their super high quote accuracy and low (even nonexistent) spreads make them an appealing option to traders who want to be able to choose their position size and not wait for the market to determine the prices for them.
There are other account types such as PAMM, MAM, copy trading, and investor accounts, which you can look further into once you’re a bit more experienced. But there’s something you shouldn’t skip, and that is demo accounts.
Make sure your broker of choice offers robust demo accounts so you can test out their trading platforms and broker conditions before risking any of your real capital.
6- Intuitive Trading Platforms
Make sure the broker you’re going to choose uses up-to-date and intuitive trading platforms. These platforms will directly impact your performance in the forex market. So check to see if your broker uses good ones. Some of the most well-known trading platforms in the market include:
MetaTrader 4 and MetaTrader 5
No one can talk about trading platforms and miss MT4 and MT5. These trading platforms are modern and sophisticated. Despite some differences, their intuitive features make them both great platforms for traders of all sorts.
While MT4 has amazing features, it’s MT5 that truly captures everything a trader would possibly need. With 21 timeframes, 38 technical indicators, added pending order types, and even a forex calendar, this trading platform proves why it’s worth the hype.
cTrader
cTrader is another popular trading platform that focuses on fast entries and executions, as well as trade automation and code customization. As expected, the platform is available in web and app versions and is compatible with Windows, Mac, and Linux operating systems.
7- Sensible Leverage Ratios
Leverage is capital you can borrow from your broker to help you control larger trades. When you use such capital, your potential gains are heightened, as are your possible losses.
Leverage trading is an inseparable part of trading forex or any other assets, so traders should be quick to get acquainted with it. While it’s not a crazy concept to wrap your head around, due to the risks associated with leverage trading, you should be extremely cautious when designing your trading plans with this tool.
Moreover, they need to look for brokers with sensible leverages.
While everybody here can agree with the fact that leverage is a great tool that can help you make more money, it’s not okay to use crazy ratios that can blow your whole capital away in minutes.
Avoid brokers that offer excessive leverage ratios like 1:2000 or 1:3000. Instead, stick with a sensible broker and trade with discipline so you don’t forget your risk management techniques.
8- Robust IB Plan
IB stands for introducing broker. It’s basically when you bring new clients to a broker and then receive a commission based on every trade that they make. To think of it, becoming an IB is like entering the grand scheme of financial markets without any of the risk that usually accompanies it.
When you’re looking for the best broker for forex trading, you should also consider their IB plans and policies. Do they offer competitive rates to their IBs? Do they provide you with an interface to manage the clients you bring to the broker? And so on.
9- Helpful Educational Material
Especially as new traders, the most important thing you should be doing is learning. Forex is the largest financial market in the entire universe, and it’s impossible to learn all about it.
However, learning as much as you can about the foreign exchange market and how you can trade on it will not only make your job easier but keep your money safe as well.
First, look for a broker that offers helpful educational material that can help you learn new things or update your knowledge. Then, see if this material is categorized and if it comes in diverse forms (photos, videos, blog posts, forex trading courses), etc.
10- Remarkable Customer Support
Lastly, you should ensure your broker of choice has remarkable customer support. When trading in a super time-sensitive market such as forex, you literally cannot afford to not have any help available in times of problems and challenges.
So, look through reviews to make sure the broker you’re interested in has excellent customer support that’s not only responsive and helpful but is also able to assist you via various channels (online chatbox, phone, email, social media, etc).
What's the Best Broker for Forex Trading?
So, you know everything you need to consider. Now, it’s time to find the best broker for forex trading.
Not to tout our own horn, but you shouldn’t miss ITBFX under any circumstances. Our regulatory licenses and long line of positive testimonials can’t do us justice when trying to describe our service quality.
Our spreads are extremely low (starting from 0.0 pips) and our commissions are nearly nonexistent. You only have to pay a meager $4 dollars per every lot you trade on our ECN account.
Speaking of accounts, you can try all of our account types (nano, standard, ECN) in demo mode. Additionally you’ll have the opportunity to use these accounts on both MT5 and ITB broker’s exclusive trading platform, ITB Trader.
On ITBFX, you’ll get to create a diverse portfolio for yourself that includes forex and cryptocurrency pairs, stocks, indices, and precious metals. We’ve gathered everything you would ever need in one place.
Additionally, you can take advantage of our IB plan to make money without sitting behind your screen for hours or not being able to sleep because you fear you might lose everything.
Lastly, if you have any questions about ITBFX and how or why you should create an account with us, you can reach out to our reliable customer support team at any hour of the day.
Final Thoughts
Finding the right broker is one of the earliest yet most important steps every novice trader should take. If you start out with a good broker from scratch, you’ll definitely be spared a lot of hassle.
To find a good broker, there are several factors you need to consider. These factors include the broker’s regulation and credibility, fee structure, asset diversification, account types, trading platforms, and more.
Considering these factors, ITBFX becomes an appealing option for novice traders looking for the best broker for forex trading. If you want to know more about us, you can click here and visit our website!
The broker you pick will influence your trading journey in so many ways that it can make or break it. Your capital safety, order execution speed, and tools are just some of the factors that will depend on your broker.
Some factors you can consider before choosing a broker include safety measures, regulatory compliance, fee structure, asset diversification, leverage ratios, account types, trading platforms, customer support, and IB plan.
ITBFX is a great broker for traders of all backgrounds. Our assets are diverse, trading platforms modern, fees low, and, most importantly, customers happy.
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