Do you know that the foreign exchange market sees trade worth trillions of dollars each day? It is labelled as the largest financial market in the world. However, to be a trader, you would be sad to know that there is no central market. Thus, the individuals in America or anywhere else in the world that look to trade forex need a forex broker for US residents to fulfill his trading activities.
However, with the growing number of forex brokers, increasing with each passing day, it becomes hard to select the right one. The overwhelming information about brokers over the internet and in the magazines, as well as the advertisements that tend to pop up in front of you, is likely to confuse an individual. So, you need to be careful in your selection and here are some key factors in choosing the right forex broker for US clients.
Before choosing a broker, it is better to ask him whether he is a member of NFA and is registered with US Commodity Trading Commission or not. Usually, the companies will be associated with the latter as a Futures Commission Merchant and Retail Foreign Exchange Dealer. It is important that your broker complies with the given details because the NFA is critical for industry wide self-regulatory organization that helps in keeping a check at the futures industry in the united states. CFTC assists in the regulation of the commodity futures and commodity futures and options in the market, with the aim that the users and individuals are protected from any kind of fraudulent activity.
Check account details
All the forex brokers you will encounter in the market would have some sort of perks associated with their accounts.
Start by checking the leverage and margin because the leverage amount depends on the broker. You might be given a 50:1 or a 200:1 leverage or anywhere in between. Leverage is like a loan, money that brokers give you to trade. The benefit is that with a 50:1 leverage, if you put up $1000 in your trading account, you will be able to secure a position at as much as $50,000. At one side, the potential for you to acquire more profit is enhanced by a great deal. However, on the other side, the if you end up losing the trade, it will also be a huge loss.
Then you need to look at the commissions and spreads as this is the primary way a broker earns his money. You will be charged a specific amount of spread which is primarily the difference between the bid and ask price. It implies for any forex pair and varies from individual to individual. Similarly, there are certain brokers who would tell you that they charge money only on the wider spread. This means that they make money depending on either specific number of pips or the market volatility. The notable thing here is that wider spread will make it more difficult for you to gain profit.
Moreover, there are brokers who will ask for a specific amount as a minimum deposit. The forex brokers for US residents may ask from few thousand dollars to as low as $50 or $100 to begin trading. And considering the leverage that you get, with a small deposit, you are able to make decent trades. However, it does become a risky move. There are different types of accounts labelled as standard, mini, and micro, that have varying initial deposit requirements.
And lastly, when checking the account details, you should consider the ease of depositing funds and withdrawals. The process has to be simple and easy and brokers may accept funds in numerous ways. You can add money via your credit card, ACH payment, and even through skrill and paypal. Certain brokers also accept wire transfers along with other traditional forms such as bank check or personal check.
Currencies you can trade
There are numerous currency pairs available in the market but only a few have managed to secure most of the spotlight. The pairs that are labelled primary include the ones that have Japanese Yen, USD, Euro, British Pound, and Swiss Franc. While a broker may offer you a great deal of pairs when it comes to trading, chances are that you will be sticking to the ones that involve the 5 given currencies.
The customer support is a matter of concern for many people. It is because most of the individuals who step into the market are usually unaware of the trading. And when the customer support ends as soon as they deposit the funds, you are left with no clue on what you should be doing. So, before you finalize your broker, we advise you to give a couple of calls or send emails to test their customer service and support. See the wait times and how effectively they have answered your queries. Don’t shy in asking about the account details, and ask questions regarding the details of the accounts including the leverage, minimum deposits, withdrawals, and similar other things.
While many people keep it the first priority when selecting a broker, we suggest you to put it at the bottom end of your wish list. It is, without a doubt, one of the most critical things and perhaps something that you will encounter every day. This is where you will place your trade and make all your strategies. Therefore, it should be easy to use and simple. Moreover, if you are an advanced trader, or wish to progress forward in the industry, you should pay attention to the tools that are offered. When you are making your strategies and doing technical analysis of the market, the tools and indicators are what come in handy.
But keeping the platform at the top and neglecting the account details is pretty unwise. You should take a look at the account details first because that is what will determine the trade that you will be able to do and the profit you are going to earn. Thus, keep the details first and then talk about the platform.
While you select the platform, keep in mind a few things. There are tools that help you with technical and fundamental analysis which should be present and you should have clear buy and sell buttons. Navigating around on the platform, selecting the currency pairs of your desire, switching from one tab to the other, and having a clear overview of profit and loss, all is critical for a trader. So, each option should be clearly visible and distinguishable from one another.
Search and read reviews
And lastly, before you finalize a broker, search about it on Google. Read a few reviews and see what people are saying about it. Don’t fall for the scams and do a thorough research on multiple brokers in the market before you finalize your decision.
So, these are a few things that you must keep in mind when choosing the forex brokers for US clients. Make sure that you don’t rush when making the decision and clearly evaluate the platform. Don’t forget to search about it and read its reviews before you proceed with account sign up.