There is enormous competition between online brokers. work.Which have different advantages and disadvantages, so although it is not an easy task is very important to know how to find a good broker with whom we will
When choosing a broker, several aspects must be taken into account, but we believe that one of them is the one that has the most relevance: regulation.
In order to choose a good Broker we must analyze the pros and cons of each company, we must study its capabilities, as well as the services provided.
STEPS TO FIND THE RIGHT BROKER
⦁ STEP 1. Read this article divided into 6 main points.
⦁ STEP 2. Compare Brokers.
⦁ STEP 3. Try a DEMO account.
⦁ STEP 4. Open a REAL account.
There are certain things you should know
1- Is the Broker regulated? If so, where?
In each country there is a regulatory environment and different requirements for financial companies. In order to choose a good Broker it is good to do it bearing in mind that the headquarters is in a country that has regulatory agencies that supervise the Broker. When this is regulated at an international level, the requirements could be less demanding.
Examples of regulatory bodies:
⦁ United Kingdom – FCA (Financial Conduct Authority)
⦁ United States – NFA (National Futures Association), CFTC (Commodity Futures Trading Commission),…
⦁ Euro Zone – Spain (CNMV), Germany (BaFIN), Cyprus (CySEC), France (AMF),…
⦁ Japan – SESC
⦁ Australia – ASIC
2- How reliable is the Broker’s platform?
There are two types of trading platforms, one for desktop and one web-based (webtrader). It is important that depending on the hardware and software we have, we choose the type of platform that best suits our needs, which is essential for trading.
Beyond the appearance is very important the stability of the platform, that is to say that when news or economic events are published worldwide, the platform is not blocked.
When it is said that a platform is easy to use, it refers to the fact that when entering an order or closing a trade is done immediately, a single click for the operative as well as the management of stops of losses. A trader may also take into account features of limit orders and other types of orders.
A constant trader needs charts and other help to manage the account very well, a platform that has this type of tools is a good choice when choosing Brokers is concerned.
In order to obtain more competitive prices both for them and for their clients, the greater the capitalization and solvency of the broker, this leads to better credit relationships with their liquidity providers which becomes better market prices.
It is very important that investors carefully analyze and evaluate the Broker they are going to choose to trade. Because of the OTC nature of the market it is very difficult to obtain competitive prices if you first have or deposit guarantees in a credit institution or a bank.
Remember that when being supervised by regulatory entities, you must have a minimum solvency requirement which shows how big the company is, this will also help you choose a better Broker.
4- Broker or Dealer…?
It is very important to understand and understand the difference between a Dealer and a Broker as there are currently few types of companies to trade OTC as foreign exchange (OTC FX).
The Broker is an intermediary between the client and a market maker. He is in charge of sending the client’s order to a third party to execute it on the trading desk. Brokers earn commission on this service and/or orders sent to the table.
The traditional method that most banks or financial institutions have are “operating tables” The prices offered for purchase and sale to customers throughout the day have two characteristics, some are quoted on a fixed basis, ie their value is the same throughout the day, in other cases companies use a system of dynamic forks, which means that the price varies depending on the liquidity of the pairs. The Dealer is always interacting with others to manage their risk and their Forex position. The prices of each Dealer vary their currency price a little, this price is based on a global currency book.
Do not confuse the ECN Brokers with the ECNs of the stock markets, they are actually totally different.
ECNs act as Brokers for different Dealers or trading desks. The ECN distributes to its clients the appropriate prices and volume for the price it had previously received from the Dealer. Here the forks are the result between the difference of the best buy price and the best sell price.
5- Customer service
Forex is a market open 24 hours a day, so when selecting a good Broker online it is important to take into account the speed with which they provide support or customer service.
Keep in mind the method or system of communication, the answers all this information is key when answering your needs.
With the demo account, you can simulate questions in cases of complications at the time of trading.
6- Comparison of brokers
Periodically at Mundo-Forex.com we thoroughly analyze and test numerous online brokers. We make comparisons and rankings according to the services they offer, we publish their welcome offers for new clients,… You can find updated information of what we consider the best brokers on this page: Best Brokers.
To see if they fit your needs the best is to open a free demo account in which you will have access to the trading platform and all the tools offered by the broker under a test environment with a virtual balance. You will be able to test the broker’s service as if it were a real account but without risking your money. If the broker fits the one you are looking for and already has a trading system with which to trade, you can open a real account with greater guarantees.