Over the years, foreign exchange trading has become one of the most popular ways of investment around the world. This happened very fast thanks to the development of the internet
Which was used by Forex brokers to give access to the citizens of countries who probably have not even heard about Forex trading ever before.
The old and dark days of the past are gone, and today, Forex stands to be one of the most successful financial markets around the world. However, this also means that the market is full of scam companies that are trying to lie to people and get their funds illegally.
There are many things that traders should consider before choosing a broker to trade with, but probably one of the most important things is the regulations and licenses that the broker owns. A thorough IG Trading or Etoro review, for instance, would be a good start. Forex trading is becoming more and more popular every day and it is reaching heights never seen before.
You May Like to Read: Steps to Build an Automated Forex Trading System
What are Regulations and Why are They Important?
Regulations are a way for countries around the world to make sure that traders in their jurisdiction can stay as safe as possible while trading Forex. There are many regulatory bodies around the world and each of them is very different from one another.
There is a huge Forex Brokers List who are regulated and authorized by official agencies that make sure that trading with them is as safe as it gets. In addition, you have the ability to have access to a huge trading market thanks to the well-regulated Forex brokers.
Some of them are a lot tougher when it comes to regulatory frameworks, while some of them are very light. For example, one of the strictest regulatory agencies is in Europe, they follow the Markets in Financial Instruments Directive (MiFID) of 2004, and although there are many different regulatory bodies in the region, the main guidelines that they have to follow are the one of MiFID.
However, there still are some differences between the regulatory bodies in Europe. For example, CySEC, the main regulatory body of Cyprus, is known to be a lot less strict than others on the market. Because of this, many FX brokers prefer to get authorized by them, since they will be able to offer services to every country in the EU if they are registered in at least one of the EU member states.
A very interesting regulatory framework is one of the United States. In the USA, brokers are not able to offer services to the citizens of the country unless they are officially registered in the country. In addition, China is also very strict when it comes to regulations – it is so hard to get a license there that most brokers avoid this market altogether.
Also, make sure that the broker keeps the funds of their clients in segregated trading accounts. This is very important because even if the broker goes bankrupt if it keeps the funds of their clients on segregated trading accounts, it means that you will be able to have access to your money without any problems.
Regulations can keep you safe and create a very secure environment for everyone on the market. So, if you do not want to become one of those horror stories that we have all heard about, it is very much recommended to start trading with well-regulated Forex brokers.
You May Like to Read: What is Leverage in Trading?
The Price for Trading
While trading Forex, you need to be sure that you are using a broker that has the least commissions and fees. While investing money in Forex, you need to be sure that you are getting as much profit as possible, and spending money on commissions does not make any sense. So always be sure to use FX brokers that have very low spreads.
There are many Forex brokers who have very low fees and commissions, which is a great thing because you will be able to use the remaining money for trading Forex and gaining even more profit.
In addition, some of the best Forex brokers on the market do not charge any commissions for deposits and withdrawals at all, which makes trading with them a very good decision. So, before you start trading, make sure that you are trading with a broker that has very tight spreads.
Available Trading Instruments
Trading instruments are the things that you are using for trading. There are many of them available, the most popular one being currencies. While trading currencies, you have the ability to choose between different types of them, such as major currency pairs, cross-currency pairs, and finally, exotic currency pairs.
Generally, the available trading instruments depend a lot on the trading platform that the broker is using. One of the most-used platforms, MetaTrader 4, offers access to dozens of different trading instruments. Because of this, many brokers around the world use MT4, which was developed 15 years ago, in 2005, by a company called MetaQuotes.
The best Forex brokers around the world have a number of different instruments available, a few hundred of them. It is very important to find the one that offers a wide range of them for a more successful and diverse trading experience.
You May Like to Read: Benefits of Forex Trading
Forex Trading Payment Methods
As of today, there are many different types of payment methods available. In most cases, the best brokers will offer you the ability to make payments with the most popular ones, such as Visa, MasterCard, PayPal, and many others.
When choosing a Forex broker, you must be sure that you are using one that has many withdrawal methods available for traders. Also, make sure that withdrawing money does not cost much and that the withdrawals are made in as little time as possible.
Available Account Types
Most of the Forex brokers around the world have different types of accounts for different types of Forex traders. For example, for those who love to trade with huge amounts of money, FX brokers have created Large Accounts, where they can deposit huge amounts of money and trade with large bets.
For those who want to get more experience, FX brokers have demo accounts. These are very popular for both, beginners and professional Forex brokers since they have the ability to learn more about FX trading and the broker itself as well.
You May Read: Most Used Indicators by Pro Traders on TradingView
Bonuses & Promotions
Last bat not least, it would be very nice to use a broker that offers different types of promotions and bonuses. There are many of them available on the trading market today, and these bonuses give you the ability to trade even more.
However, because of local regulations, Forex traders in Europe can not enjoy bonuses because it is against the regulatory framework in the region. Most countries around the world allow bonuses.
Why is It Important to Find the Right Broker?
You should always remember that Forex trading is very much a risky business and you should only trust Forex brokers that are offering you a safe and secure Forex trading environment. If you think that there is something wrong with the broker, just avoid it at all costs.
You May Like to Read: What is Funded Forex Trading?