People often ask which is the best broker out there for forex and CFDs, but the truth is that it is difficult to compare them in that way because they’re very different. As an individual trader, what you should be looking for is the broker best suited to you. You should always make sure that it is properly regulated and provides good basic protection for your funds, but beyond that, you will need to find one which offers the right balance of opportunity and risk and that you find intuitive to use.
1. Fees, Commissions, and Spreads
It is important to understand the fee structure before signing up with a broker. Fees can apply in a range of areas, but when it comes to trading itself, low fees are not necessarily the best option. They tend to correspond with higher commissions. The best balance of fees and commissions will depend on your individual trading style. You will also need to consider the spreads on offer. Make sure to compare these on the same day to account for market activity.
2. Currency Pairs
Many of what are generally considered the best forex and CFD brokers only offer a limited range of currency pairs: the major currencies with the greatest liquidity. This is sufficient for basic trading, but if you have more in-depth knowledge of a particular minor currency, perhaps because of where you have lived, you may prefer to seek out a trader that offers wider options in order to take advantage of that knowledge.
3. Leverage
Beginner traders often see leverage in very simple terms and are most attracted to the brokers who offer the highest leverage. Higher leverage means higher risk, so it isn’t necessarily a good thing. You need to work out the level that’s right for you. Some brokers only increase leverage if you have a higher deposit, or you have traded there for a certain amount of time. This can be frustrating for established traders, but it provides a safeguard for newcomers.
Many brokers offer educational materials such as eBooks, video tutorials, and webinars, which are really useful if you are just starting out – and it’s never a bad thing to deepen your understanding. Other tools and resources have a very immediate application to trading, making it easier to track market trends over both the short and long term and keeping you up to date with news that might affect currency values.
5. Withdrawal
Some people have a great experience with their brokers only to discover that it is really hard for them to extract their funds. In fact, most brokers restrict the frequency with which you can make withdrawals, apply fees or impose other restrictions. You should make sure that you understand how this works before you sign up. There are trade-offs to consider – for instance, if you can wait longer for your money, it is easier to avoid fees.
Many traders start out with one broker and move two or three times before finding one that is ideal for them. This is normal, as what you need may change over time. Find one you are comfortable with but try to stay aware of other options and learn as you go.
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