Jayden When choosing a forex trading broker, you should carefully check their services and policies.
This includes the following:
(1) Currency pairs offered: Brokers should be able to offer at least major currency pairs. Brokers generally offer many trading currency pairs, the following are the most traded currencies, EURUSD, USDJPY, GBPUSD, USDCHF, AUDUSD, USDCAD, NZDUSD, EURGBP, EURCHF, and EURJPY.
(2) Trading fees: Trading fees are calculated in the form of spreads. The smaller the spread a broker charges on each trade, the greater your trading profit and the smaller your trading loss. Compare the spread levels of a number of brokers, which reflect the different costs of trading. For example, the bid/ask spread on EUR/USD is 2 pips, but if you can find a broker that offers the same level of service with a 1 pip spread, that’s great!
We recommend you to use IC Markets broker, the spreads of the currency pairs are very low, so your trading cost will be very low. How to open an account with IC Markets? You can refer to our article “How to open a forex account?“.
(3) Margin requirements: The lower the margin requirement, the higher the leverage, and the greater the potential for profit and loss. Margin rates also vary greatly between brokers. Lower margin requirements are good for highly skilled traders, but bad when you trade wrong.
Extensive use of leverage leads to high profits, but at the same time leads to high risks and huge losses. Be realistic about margin and remember that it is a “double-edged sword”
(4) Minimum lot size requirements: The lot size between brokers, generally varies between US$1,000, US$10,000 and US$100,000. Contracts denominated in US$100,000 are called “standard” lots, contracts denominated in US$10,000 are called “mini” lots and contracts denominated in US$1,000 are called “micro” lots or “Mini” lots. Some brokers even offer incomplete unit contracts, called “zero” lots, which actually allow you to create your own unit contracts.
(5) Rollover costs (position costs): The difference between the level of interest rates in the base currency country and the level of interest rates in the quoted currency country determines the rollover costs. The greater the interest rate differential between currency pairs, the greater the rollover fee. For example, when trading GBP/USD, if the spread between GBP and USD is large, then the rollover cost of holding the pair is high; conversely, if the spread between CHF and USD is small, then the rollover cost of holding the pair is low.
(6) Interest on margin accounts: The majority of brokers pay interest on traders’ margin accounts. The level of interest fluctuates with different interest rates between countries. If you decide not to trade for a long period, then the money in your account will generate interest income. However, it is important to remember that most brokers do not allow you to earn interest unless your margin requirement is 2% or more.
(7) Hours of operation and trading: Almost all brokers’ hours of operation coincide with the operation of the global forex market, specifically running from 5 pm EST on Sundays to 4 pm EST on Fridays.
(8) Order execution speed: This is a very important aspect when you are choosing a forex broker. Don’t choose a broker that re-quotes when you click on a price or has very large slippage. This is a very important issue when we scalp trades. You need a broker that will close quickly at the price you click down, i.e. the price you see is the price you close at.
(9) Free charts and technical analysis: Choose the broker that offers you the best charting services and technical analysis. These are important for active traders as they need to analyze and make judgements independently. Look for a broker that offers a free expert charting service and allows traders to trade directly on the charts.
