Forex and CFDs are great investment instruments to use for its flexibility. You can adjust your trading strategy and risk profile accordingly, giving you complete control over your trading experience. You can also play it safe and use our simple and effective trading plan to get started with online trading.
Before you can trade foreign currency pairs or commodities, however, you need to choose a financial broker. More importantly, you want to have the best trading platform at your fingertips. These aspects of your trading experience matter since they determine how quickly you can react to market changes – and how profitable you can be in the long run.
Choosing a broker is both easy and challenging. You have more brokers to choose from, so you can always find a broker that suits you perfectly. At the same time, the wealth of options can make finding the right broker to engage confusing. Fortunately, this article will take you through the necessary aspects to consider when choosing an online broker. Let’s get started, shall we?
A Regulated Broker
One of the first things you want to check when comparing forex brokers is whether the brokers are regulated. Using the services of a regulated broker is a must; that is how you ensure the safety of your investment and have a pleasant trading experience.
Full compliance with the UK FCA regulatory requirements is a good starting point. The FCA regularly reviews brokers to ensure compliance and a fair trading ecosystem. You know you are engaging a reputable broker when it is complying with the FCA requirements.
You also want to check the brokers’ licenses before moving forward. Among the bodies that issue licenses for forex brokers are the Cyprus Securities and Exchange Commission (CySEC) and the Australian Securities and Investments Commissions (ASIC).
Each broker carries a different set of instruments. Some focus on foreign currency pairs. Others offer you access to stocks and bonds. There are also online brokers that focus on commodities or CFDs. The best way to choose a broker is to start with the instruments you want to trade.
If your plan is to trade CFDs, for example, brokers like Plus500 – the ones that specialize in CFD trading – are better. They know the market well and will offer you the right set of features to support your trades.
There are also brokers that offer you access to all financial markets, which means you can trade gold as easily as you can EURUSD. While these hybrid brokers offer you more opportunities to make money, the feature sets you are given – and the trading platform you can use – don’t always match the instruments.
Speaking of trading platforms, you also want to make sure that you are comfortable with the trading software used by the brokers you are comparing. Some brokers use proprietary software, but they offer free trials to help you get to know their software better.
Others stick with more popular options such as MetaTrader. Many brokers use MT4 or MT5 because investors are already familiar with them. However, your focus should be on whether the trading indicators and supporting tools you need are available on the platform.
There is also a big community of developers and investors behind popular trading platforms and brokers. This is an added bonus to consider since a big community means more people helping you with issues and customisations.
Reviews and Testimonials
You cannot choose an online broker without considering reviews and testimonials of past (and existing) users. Keep in mind that all brokers will have negative reviews from unhappy customers; it’s the number of positive ones – and the contents of those positive reviews – that separate the good brokers from the rest.
For example, InvestinGoal is a great source of online broker reviews. It offers objective reviews as well as ratings for each broker. You can also find out more about features, fees, and other details as you go through each review.
If you are interested in giving Plus500 a try, for instance, you can read a review here and see if the online broker offers the features you need to bank profits. A quick scan of the InvestinGoal review will tell you that Plus500 uses a proprietary trading software, offers 1:4 maximum leverage, and lets you open an account for as little as $100.
Making Your Decision
One last thing to take into account when choosing an online broker is your comfort level. At the end of the day, feeling comfortable with the online trading platform you use will give you the edge and allows you to focus on what matters most: profiting from your trades.
With these aspects fully considered, you should be able to find a suitable online broker to engage. Create an account and use the trading tips we covered here on Watch My Wallet to help you get started with online trading.