How to choose a Forex broker?

ADMISSION FOR BEGINNERS

What is Forex?

The International Forex currency Market (FOREX) FOReign EXchange is an interbank, over-the-Counter currency market.

What are the benefits of Forex trading?

The Forex market is characterized by very high volatility (exchange rate dynamics), a record amount of turnover (more than 6 000 000 000 000 dollars a day), as well as a very small amount of collateral transaction. Therefore, anyone can become a participant in the FOREX market by trading through Forex brokers.

Who are the brokers?

Brokers provide the opportunity to make transactions in financial markets. They are intermediaries between the trader and the market. The income of the Forex broker is commission, due to the difference (spread) between the purchase price and the sale of currencies.

How do I determine which Broker is reliable, which is not?

First, determine the company's key valuation parameters. Many investment blogs, and intermediaries themselves for advertising purposes can benefit from absolutely negligible benefits, presenting them as a decisive factor, where the profit of the trader in full depends. At the same time, really important characteristics of the companies remain undisclosed, usually because there is nothing to brag the broker.

Then we look at the most important parameters that need to focus first.



KEY FACTORS OF PRIBYSFOREX BROKER

The company that the trader trusts with their money must be reliable. Regardless of the favorable conditions it offers, and no matter how high income, if the Broker, eventually turns out to be a scam, or just go bankrupt, the trader will not receive his profit anyway. In order to assess the credibility of the company, you should pay attention to the following factors.

Customer reviews

Forex Broker Reviews

Studying reviews about brokers is the first step in choosing a company that even a beginner who still has little understanding of the specifics of stock trading. Living experiences of real customers will help to understand how honest the company is and how profitable trading conditions are.


Important!

1. Anyway, I don't believe that reviews are on the websites of brokerage companies themselves. Almost always, such reviews are written by the employees of the company and have little to do with reality.

2. Consider the latest feedback for the last six months or a year, as previous reviews may be out of date and may not reveal your current business position.


You should also pay attention to the resource on which the traders ' opinions about the broker are placed. Only the most reputable portals carefully make sure that Forex reviews are honest and unimpartiable, and claims against companies are backed by evidence in the form of screenshots and links.

Licences and regulations

The presence of a reputable regulatory organization license is the most important criterion that determines the broker's credibility. Ignoring this factor, you can get a very unpleasant surprise in the form of losing your deposit after a short time.

Why? It's so simple. If a company does not have a license-then its actions are not controlled in any way and it is not known whether this company actually exists or whether it has only an attractive site.

Companies licensed by a reputable regulator strive to provide high-quality services and offer good trading conditions. And this is not surprising, because the clients of such brokers can complain to the regulatory organization, and these, in turn, will apply sanctions for the offending, until the license is deprivation.

Each country has its own rules regulating the Forex market and brokers. In Russia, this is the Law no 460-FZ, which obliges all Forex brokers operating on Russian territory to obtain a license from the central Bank of the Russian Federation from January 1, 2016. In addition, such companies should join the SRO (Self-regulated organization).


Important!

Obtaining a national regulator license is not necessary for foreign brokers. Such companies will have some limitations when working in Russia (for example, they will not be able to advertise their services inside Russia). However, any citizen of Russia or the CIS will have the right to start working with such a broker freely over the Internet.


From this moment and begin the complexities in which a novice entrepreneur can become a grated. Is the license of the Russian regulator important or can you work with a foreign broker? If you choose a foreign company, what license should you have?

There are many questions, so let's look consistently.

In Russia

We believe that among the original Russian companies undisputed leaders are Forex brokers who have received a license of the central Bank of the Russian Federation. Other licenses (e.g. CROWFR or RAUFR certificates) also do not hurt, but their significance is not in fact so high: the requirements required by these regulators are very low, also these organizations are not state owned and have minimal privileges.

Incidentally, many of the oldest FOREX companies themselves were initiators of creating the aforementioned organizations to somehow regulate the work of Forex brokers at a time when the Forex market was not yet legally established in Russia.

From 2016, the authority of certificates from the data of the SRO among the brokers was eclipse by the license "Forex-Dealer" of the central Bank of Russia. Now brokers who have received permission from the central bank, are rightly considered as holders of the most prestigious license in Russia. The list of such companies should be noted in the first place.

Foreign regulators

Among the foreign brokers everything is much more colorful. There are many reputable organizations that issue licenses such as Cyprus CySec, Swiss FINMA, Australian ASIC (to see the appropriate list of regulated brokers, click on the link). It is well known that these regulators do not issue licenses to random companies, so it is safe to consider them as potential partners.

It is particularly worth emphasizing the UK financial proceedings. If there is an unwavered authority in the world of regulators Forex-it is FCA.

FCA Brokers

In order to obtain an FCA license, the Broker must meet a wide range of stringent requirements and have huge own funds. An important feature of the organization is 100% guarantee compensation to customers of losses (up to 50 000 euros) in case of bankruptcy or fraud of the company.

Fortunately, many FCA Forex brokers provide their services to Russian and CIS citizens.

Company age

It cannot be conclusively concluded that an undertaking providing brokering services on the market for 9 years is more reliable than a company operating in the 8th or 7th year. The edge here is much thinner, but there are some clear criteria to look at.



It's important!


Even if such young companies offer extremely favorable conditions, and even if the founders are well-known entrepreneurs and financiers-there is a risk that the project can be a failure, and its president will always find arguments in his defense, (with money customers are already lost).

We recommend taking 10 years to determine the reliability threshold. A Broker who has worked on the market for such a period, and has no stains on reputation, deserves some confidence. The risk of bankruptcy of the organization is also minimized, because the Broker has already managed to "get back on his feet" at the expense of his business, established for years. Although, you must be aware that no financial company is protected from force majeure.



Terms

Trading conditions of Forex brokers

Trading conditions determine how profitable trading will be through this broker. There are both objective categories that affect the volume of profits from trading, and subjective factors that are important for some traders and completely indifferent to others. Comparing trading conditions of brokers is a necessary step towards choosing a reliable company.

Demo Account

For novice traders-having a demo account-is the number one requirement. We in any case, do not recommend newcomer-immediately open a real trading account-because. The chance of losing your entire deposit is very huge. Only after successful trading with the use of the trading system on the training account-you can move to real trade with real money.


We st
rongly recommend that you start working in the Forex market only on the training demo account. Therefore, the presence of a demonstration account is a mandatory requirement for a broker.


Today, many brokers offer a demo account, but there are many conservative companies that do not give such an opportunity. We advise you to start working only with brokers offering unlimited demo accounts.

Minimum deposit

Each Broker sets a minimum amount of funds that is willing to accept as the initial deposit on the trading account. If Broker is not set to strict requirements, the default amount is zero. However, for a convenient trading even with leverage you will need to have at least $200-$300 (for standard accounts) and $10-$20 (for cents). Therefore, the availability of Cent accounts becomes an important condition for customers with a small deposit. 

Payment Systems

WITHDRAWAL of foreign exchange brokers

The number of payment systems available depends on the ability to deposit the account with the broker and withdraw funds from this account. Payment systems can be divided into four categories:

  1. Remittances
  2. Bank transfers from your account
  3. Card number (VISA, MasterCard)
  4. Electronic Payment Systems (Webmani, Yandex-Money, etc.).
Currency Brokers Payment Systems

Practically every main Broker provides the ability to make trades in any of these ways. However, there are private cases. For example, Broker gives you the opportunity to replenish your account or withdraw funds to your WebMoney wallet (in addition to the Standard Bank transfer or card), but the trader uses only Yandex. Money. At the same time, it is unprofitable for the client to transfer money to the card and to the top of the account from it, because there is an additional commission for it. Therefore, when choosing a broker, you need to pay attention to all the ways of making money transfers, and immediately calculate possible options.



It's important! There are brokers that offer many convenient ways to get your account in, but at the same time limit the possibility of withdrawing funds, leaving 1-2 unpopular methods! Be careful.


Size of spreads and swaps

Spread Broker

The Spread is the difference between the buy and sell price of the same asset. You can compare it with the Commission in the bank's currency bank. In fact, the spread is an indication of how much the deal would go "negatively" immediately at the time of its opening. If the spread is small, then when you open the trade in the right direction, this difference is compensated in just a few seconds if it is large and then to simply go for profit, you will have to wait (even if the trade was opened in the right direction).

The Spread includes brokerage-fee commissions for the company's indirect activity on the market. Sometimes, a Broker charges a commission separately, and then spreads can be equal to zero. To correctly compare spreads, you need to summarize the size of the spread and commissions, and then it becomes clear which Forex broker asks for a minimum fee for their services. 

Swap in the usual sense Forex-Trader means the difference in the interest rate of currencies from a currency pair traded. Swap can be both positive and negative, and its size is set by the broker for each trading instrument.

What is a swap

The swap, as in the spread, is a "stock" brokerage, but the difference is that the swap is written off (or accrued) on a daily basis, and it is worth paying special attention in long-term trading.

The more positive and less negative the swap on the same currency pair, the more profitable the trading conditions on the broker.

Broker Pricing

Given the decentralized nature of the Forex market, prices arise in a slightly different way than on classic stock exchanges, such as stock futures or commodities. Liquidity providers and price determinants are big players-market makers such as J. P. Morgan, USBC, etc. Most brokers broadcast quotes from them to commercial terminals, sometimes directly, sometimes through news agencies such as Bloomberg and Reuters.

When the trader gives a command to conclude trade at these prices, the Broker operates, depending on the execution model of orders. They can be divided into two categories: DD and NDD.

The DD Model assumes that transactions are made in a brokerage firm, that is, clients trade with each other, and if there is an imbalance in supply and demand at the current price, the Broker itself becomes a counterparty. The vulnerability of this model is that a Broker can trade "against" their traders-bo. Conflicts of interest. Although this flawed practice was widespread at the dawn of the Forex market, but even now, from time to time, there are small brokered companies that are in such an ungrateful occupation.

Therefore, the NDD looks much more appealing. Such a system assumes that the intermediary transfers customer transactions to interbank and seeks the counterparty for them among other market participants. Thus, the company does not trade with the client, but on the contrary, is interested in the entrepreneur's profit and sharing the commission.

NDD-based companies, such as ECN brokers, are definitely the preferred option for traders because they are the preferred option. In addition to the absence of this conflict of interest between the broker and the trader-more often offer better prices for the purchase or sale of the instrument (so the spreads of such brokers-are called "flying", while the model DD-are established).

Trading Instruments (assets)

CFD Assets of Forex Brokers

Trading in the Forex market is primarily a currency pair, but the number of such assets in each broker can vary. Some companies offer to trade only the main (most popular pairs, for example, EURO USD), others provide such "exes" as USD/MXN and USD/AR.

In addition, a derivative tool, such as CFDS, enables trading in stock exchanges in the Forex market, futures indices, commodities and even cryptocurrencies. (For more information, see what i

s CFDS?). Almost all CFD Brokers act as ordinary Forex brokers, they supply only in addition to currencies and contracts for the difference. As a result, some brokers have thousands of assets available for trading, while other companies offer only a few dozen. 



It's important! This is a significant benefit, allowing you to invest in a number of exciting and promising tools such as Google, Apple, Facebook, Uber and other companies with huge growth potential.


A large selection of assets expands investment and investment opportunities, so it is better to choose companies with a wide range of trading instruments. Be sure to pay attention to this criterion.



Software

Forex Broker Mobile Apps

The quality of the software depends on the speed of execution of the transaction, which significantly affects profit. In addition, depending on the functionality of the trading platform or application, the trader may obtain additional features such as installing a trading robot or copying transactions of other traders.

Terminals (trading platforms) 


Choos
e the broker that offers the most functional terminals of MetaTrader 4 or MetaTrader 5, as well as the web version of the platform, for uninterrupted work through the browser.


We recommend selecting only Forex brokers that offer trading through the most popular MetaTrader 4 and MetaTrader 5 client terminals.  

These most popular platforms are considered simple, reliable and, at the same time, have a wide functionality and the ability to install additional programs, trading robots, advisor indicators, etc.)

Also, be aware that some brokers also have their own Web Terminal that allows you to trade online from any computer! This is a very convenient solution for traders who do not want to depend on the program installed on the home computer.

Mobile apps

A specially made mobile application-will be an additional plus for traders who are constantly moving, but want to have access to the transaction directly from the phone.

95% of mobile terminals are built on the basis of MT and have versions for Android and iOS.

Auto-Trading Services

Auto-Trading and copy trades will be interesting for both novice traders and Forex specialists. For beginners, it will be an opportunity to bid without having basic knowledge, and get the first experience. Professional traders may receive additional revenue for delivering signals, while committing the same actions as in their own trade.

There are various transaction copy services, for example, eToro's Social Trading or popular service based on MetaTrader 5, which have many brokers.

The availability of this feature will be an advantage when choosing a broker.



COMMERCIAL SECURITY

Safe verification from brokers

Some newcomers have doubts about whether to send a broker copies of their documents. In fact, it is an indicator of the credibility of the broker, because without verifying the accounts traders become susceptible to frauds.

It is much easier for an uncertain organization to require no mandatory verification, and after depriving customers of their money, relying on a hacker attack, or providing "false" proof of withdrawal request, allegedly received from the client itself. If the intermediary seriously protects the commercial capital, compulsory verification and application for copies of documents is an integral part of the cooperation with it. In addition-mandatory customer verification-this is one of the requirements of any organization of low-profile adjustment.



CUSTOMER SERVICE

Online support from brokers

Help of company consultants may be required even if all services work perfectly, but you need to clarify some important nuance. In such cases, it is very important that the support service operates around the clock and responds quickly to requests from traders.

In small businesses, customer service is usually conducted via email, less frequently via Skype. Large brokers provide a dedicated line, a call to which it is free, and are willing to help 24/5. It is recommended to cooperate with such company, T. To. There is certainty that any problem in the broker's remit will be solved as soon as possible. In addition-an important advantage will be live Chat on the broker's website.


FACTORS, TIME IN

Safety of choosing a Forex broker

Brokers who do not boast reputable license regulators or favorable trading conditions often focus on free training courses or other services available only to their customers. Such offers can be submitted in a very favorable light, but do not forget why Forex is conducted, and what really affects the profitability and security of the trade, and what is only extra few important factors.

Training

Many brokers, who entered the market only a few years ago and actively attract customers, offer free training in the opening of an account in the company and replenishment it for a certain amount. And in such offers sometimes appears almost 100% guarantee that the client will trade only in profit, using the method of the author of coaches, etc. D.

Of course, Stock Trading training is an important milestone for any trader on which the prospect of earning income depends directly. However, you cannot select a broker based on this factor. Training is free of charge by selecting any free webinar that is held regularly by private brokers.

Today, many well-known brokers offer a basic rate even without restocking, with the registration itself, which does not commit to anything.

In addition, educational materials abutted with free access to the Internet, and there are many independent resources and commercial schools, both face-to-face and remotely. Even if you are studying based on fees in one of these schools, it may be more profitable to cooperate with a small average broker. In addition, you can always learn on your own, for example, reading a Forex blog.

Exclusive Analytics

Some companies, in the struggle for the attention of customers, offer exclusive analysis, depending on their assurances, the best financial market experts. Such service is provided, of course, only to the clients of the broker and only if you replenish the bill for a certain amount.

It should be understood that the analyst basically is largely subjective, and even real market gurus are not always able to make the right forecast. When a trader has his own trading strategy, various external recommendations often only hinder and do not allow you to realize your own potential.

In addition, in most cases, exclusive analyses are based on the same technical and fundamental analysis principles that are used in compiling publicly available Forex market forecasts from well-known brokerage firms. .

Lever

Remember the golden rule: the more leverage, the greater the risk.

Leverage is important, but in practice for convenient trading enough to have a leverage of 1:50, up to 1:100. A larger arm just doesn't make sense as trying to implement it can lead to a total loss of capital with any drastic adjustments.

Brokers who give their superiority leverage 1:200, 1:500 and above, just try to create appearances of superiority where it is not required at all.

Bonuses

It cannot be said that bonuses are completely useless, but their merits are clearly exaggerated. When a Forex broker offers a deposit bonus, the money is actually virtual and will not become insured in the case of withdrawal and cannot be withdrawn. More precisely, the application becomes available only if the total income of the broker (the sum of all spreads) from the completed trades in time will cover the amount of the bonus, and the Broker more than the company's "gift". As a rule, this work takes a long time.

Exceptions are no deposit bonuses that allow you to "rest from scratch" by starting trading in the company without investing. Such proposals also have "submarines", so you need to fully read the rules of operation. For example, the offer may be limited in time, and after a week the bonus funds are deducted from the account, which remains only profitable.


RISK OF EXCEEDANCE AND CONTROL

Having already chosen Broker and even being ready to top up your account for real money, the trader should train on a demo account. In addition to examining the trading terminal and the specifics of opening an offer, a training account is needed to test your trading strategy. Having the same strategy is a prerequisite for obtaining the benefits of trading in the Forex market.



Application. OUR RECOMMENDATIONS

How to choose a Forex Broker conclusion

In conclusion, we will compile a short list of key features of a reliable broker, in our opinion:

  • License of one of the most reputable regulators (Russian central bank, FCA, FINMA, CySEC, ASIC);
  • Positive reputation in the trading community, good reviews for the last six months, year;
  • Age from 10 years;
  • Low spreads and swaps;
  • Having an ECN pricing model;
  • A large number of CFD assets;
  • You have a MetaTrader 4 or MetaTrader 5 platform, a terminal web version and a convenient mobile app;
  • 24/7 customer service in Russian;

By following these principles, you learn the most conscious and objective choice, not clouded by advertising promises. 



WHAT TO DO?

To filter the whole large list of brokers according to the above criteria-use convenient filters ranking Forex brokers in Russia and the world. Using this simple functionality-you will be able to pick up a company that not only meets the most important criteria of reliability, but is most suitable for your personal purposes. Good luck!