The best broker for each person differs greatly as each trader has different circumstances in their lives that influence their behaviour. However, there are some guidelines that you can follow when choosing a broker that meets your specific needs.
Here is a look at the main factors that a beginner should look for when choosing a broker. However, you should keep in mind that this is not an exhaustive list as each trader’s situation is different.
Is the broker regulated?
The first question that a trader should ask themselves when choosing a forex broker is whether the broker is regulated. Traders in countries such as the UK, the rest of Europe and Australia have a wide variety of brokers to choose from as these countries are trading hubs. These three regions also happen to have very strict regulators, such as the UK’s Financial Conduct Authority (FCA) and Australia’s Securities and Investment Commission (ASIC). Traders on other continents may have to choose brokers who are regulated by the authorities in their country. Regardless of where you live, you should strive to trade with a regulated broker.
Account types available and minimum deposits
Most beginner traders do not start with a lot of money, so they often prefer to trade with a broker who offers accounts that allow them to trade very tiny lots. Therefore, it is not surprising that most beginner traders choose to go with brokers who offer mini and cent accounts. Cent and mini accounts allow traders to place trades that are a fraction of one lot in size, with the two account types allowing traders to place trades with lots as low as 0.01. Some brokers do not classify their accounts in such terms but have low minimum initial deposits that favour beginner traders.
Which trading platforms are offered?
The popular MetaTrader 4 platform is the preferred option for most beginner traders. However, most brokers also have their custom platforms, while others offer third-party trading platforms that compete with the MT4 and MT5 platforms. Advanced traders may prefer to trade on platforms such as the cTrader platform, NinjaTrader and TradeStation. However, most beginning traders are best served using the MT4 platform.
The quality of customer support
Beginner traders require a lot of assistance when trading as they are not very familiar with the markets and how the different trading platforms work. Therefore, beginner traders should consider the quality of customer service offered by a broker as it could play a significant role in their profitability.
Is the broker easily reachable in case you need help with issues such as placing trades, withdrawing funds or other queries? A broker should offer live chat on their website; avoid brokers who do not offer such a service as it’s very useful for beginner traders.
Commissions, fees and other costs
Most beginner traders have small accounts, which could be significantly affected by high fees and commissions charged by a broker. Therefore, beginners should choose brokers who have low spreads and fees to prevent such costs from eating into their profits.
Unlike advanced traders with large accounts who qualify for lower costs based on the substantial size of their accounts, beginner traders should choose brokers with standard low costs for all account sizes.
What about bonus offers?
Some brokers offer deposit bonuses on new accounts that could boost a trader’s account balance, making such offers very appealing to new traders. However, be wary of such offers as they usually come with unfavourable terms and conditions that could leave your funds stuck with the broker.
You should always read the terms and conditions for withdrawing your funds once you have taken the deposit bonus, which is optional at most brokers.
The bottom line
Most new traders will find these factors to be useful in their search for a broker. If you are still having a difficult time choosing a broker, you can browse our in-depth reviews of the best brokers on other parts of this site. These reviews cover everything you need to know about each broker, highlighting their strengths and weaknesses. We have researched brokers to help save you time and make your decision easier.