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It is important to choose the right forex broker for a more effective forex trading experience. Read this article to find out some of the features that a good forex broker would have.
When selecting a forex broker, one ought to look out for its cost of trading. forex brokers more often than not benefit through commissions or spreads (refers to the distinction between the costs which forex is bought and sold at).
Fixed spreads are static and remain the same pip value notwithstanding the market’s liquidity or volatility, and are more suited to scalpers, or news traders that are looking to profit off the volatile periods of news releases. In any case, re-quotes and slippage are common with fixed spreads as forex brokers offering fixed spreads more often than not work on a market maker model – and control the execution costs through a dealing desk.
Variable spreads can offer better deals in times of high liquidity (sometimes as low as Zero pips), or during periods when the market is calmer. Variable spreads arising from No Dealing Desk executions also mean that forex traders get faster results and greater liquidity as a counterparty can come from various sources. This also reduces the need for requotes, or the frequency of slippage. However, variable spreads can sometimes run high, and may spring surprises like setting off stops and limits during times of volatility. Hence, as a forex trader, it is important to figure out the kind of forex broker which functions in a way that complements your style of trading forex. Besides spreads, most forex brokers do not charge extra fees.
For forex traders who tend to hold their positions overnight, it’s also worthwhile to consider the swap rates based on whether you are earning or paying an interest as well. PU Prime, for instance, offers competitive rates that keeps overnight fees low.
Some forex brokers also offer incentives for opening or funding an account. These can be bonuses on a percentage of your deposit, or even a flat bonus for just opening an account with a broker. Both help to increase your margins and act as additional capital for your trades.
Learn More About Forex Trading Before You Trade
Another important thing to look out for when picking a forex broker is whether or not it offers adequate investor protection that includes protection of a forex trader’s own funds, and regulation by the appropriate agencies.
While financial regulation differs from region to region, most top-tier authorities will, at the very least, mandate that forex brokers segregate client funds. This means that the money a forex trader puts in will be kept separately from the forex broker’s funds and not using its own operational costs. This offers protection for one’s money in the event of any unforeseen circumstances, for instance, if your broker goes into liquidation in the future.
It is also worthy to understand that there are some forex brokers that offer an additional layer of protection through periodical audits conducted by external parties, such as PU Prime.
Check out the different types of trading accounts PU Prime offers here.
Regulated by the Seychelles Financial Services Authority (SFSA).
Most forex brokers offer 24/5 support. As the world of forex trading can be quite complex, it is crucial to look out for a responsive forex broker among these broker options. Look out for forex brokers that provide comprehensive educational materials – like informative articles, video tutorials, or even e-books, to supplement your knowledge in forex trading.
For more experienced traders, you can consider the kinds of trading tools a forex broker provides, whether it’s the range of order types, the option for social trading, analysis tools, or a demo account.
You might also want to look out for whether a broker offers multiple account types. For instance, if you prefer to trade often and in large volumes, you might want to consider one that offers accounts that charge a commission and low spreads, as opposed to no commission and higher spreads. On the other hand, if you are looking to trade extra-small volumes in order to test a trading strategy, you might want to check if the forex broker does offer a Cent Account.
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