THE FOREX BROKER TEST – KEY CRITERIA
THE TRADE OFFER IN FOCUS
A Forex broker’s trade offer – especially the number of tradable currency pairs – is of particular interest to traders. The most popular pairs, also known as majors, include currencies that are traded against the US dollar. They are especially popular with beginner traders, as they are very liquid and are usually associated with low trading fees. However, experienced traders may be more interested in minors and exotics. Either way, the number and the range of available currencies are sure to play a role in the decision for or against a broker.
MINORS AND EXOTICS
The commercial activity of minors and exotics in the market is much lower than that of the major currencies, and they can be a challenge even for experienced traders. The number of exotics varies among individual brokers. If you are looking for a broker with a broad trading range, it is advisable to take a closer look at the minor and exotic currency pairs. For traders who do not necessarily want to commit to trading just one financial instrument, some Forex brokers have other trading options available besides currency trading, such as CFDs or stock trading.
THE CONDITIONS: TRADING COSTS AND POSSIBLE FEES
A broker comparison provides the opportunity to compare the trading costs of individual providers at a glance. With Forex trading, the spreads provide information about the fees you could incur – the major spreads are typically specified in pips. In order to gain a comprehensive overview, it is advisable to take the spreads of the minor and exotic pairs into consideration. Possible additional costs should also be considered.
Opening a trading account is often free of charge, however, many brokers may charge fees for inactivity over a certain period of time. Further costs may arise for real-time prices, add-ons for trading platforms. Depending on the payment method, costs may also be incurred for deposits, withdrawals or for a certain number of payments per month.
In addition to trading costs and fees, leverage is an important aspect in a Forex broker comparison. With leverage you can access more capital than you have available in your trading account. Some brokers stagger the leverage on invested capital. Particularly high leverage offers are more appealing for experienced traders. While leverage is definitely a key point, high leverage may not be a fit for your current trading activities.
SELECTING ACCOUNT MODELS IN A FOREX BROKER COMPARISON
Forex broker accounts should be tailored to the needs of the trader. This applies to possible fees as well as minimum deposits and benefits. More and more brokers now offer a choice between accounts for beginners, advanced traders, or VIPs. Often, accounts may vary in terms of deposit levels, but support and trading platforms could vary as well. The trading volume can also determine the account type – traders might begin with a starter account and could be upgraded to another account, according to trade volume. Sometimes traders can immediately opt for a higher account.
When comparing brokers, the following questions should be in taken into consideration: What services do I get with each account? How do accounts differ? Are there any business offers?
Account opening fees
With some providers, opening a trading account is free, while others may require a four-digit deposit. The minimum deposit with Forex brokers can vary but is usually relatively low. For traders who have no previous experience in foreign exchange trading or have a limited budget, the minimum deposit can be a deciding factor, so it plays a significant role in a Forex broker comparison.
TRADING PLATFORMS AND APPS FOR MOBILE TRADING
Determining the right trading platform is the key basis for successful trading. The best platforms have an intuitive user interface and allow for ease of operation. Specially developed software solutions are often available – depending on the broker. Many providers also rely on existing platforms such as MetaTrader 4.
The following aspects are important to consider when determining a Forex broker comparison trading platform:
- The range and selection of trading platforms
- The structure and handling of trading platforms
- Extras and tools
- Mobile trading via apps for smartphones and tablets.
Many brokers provide multiple trading platforms. The structure of the platform is important and a customisable interface is particularly advantageous. When comparing trading platforms, the focus should be on technical indicators and the trading systems offered. When creating a strategy, technical indicators are indispensable. The more support the platform offers, the better you can focus on actual trading.
Opportunities for trading on the go have become a must-have feature – one that allows for flexible use at any time. Apps for smartphones and tablets are typically well-designed and easy to use. A clear structure with an overview of your current trades is particularly helpful.
A USER-FRIENDLY WEBSITE
Only a broker with a user-friendly and attractive website can prevail as the best Forex provider. A website can be considered a virtual business card and crucial for a first impression. When comparing providers, you should first check that the whole website is available in a language you can understand – sometimes, this is only obvious upon second glance. Some brokers may have an English language website, but it is often possible to set the language to your preference. Make sure that the translation is complete and easy to understand.
Another important factor is navigation – the website should be organised and guide you through the offer swiftly. ‘One-click’ navigation is particularly popular as it allows everything about the broker‘s offer to be found immediately.
Ensure that the following information is complete:
- Contact options
- Cost models and fees
- Offer for Forex trading
- Information about the accounts available
- Terms of Service
Information about the broker or a FAQ area may also be helpful.
Customer Support – Contact and Competence
During the course of your Forex experience you may find that trading, payout, or trading platform issues arise. When evaluating a provider, we place great value on the contact options and the quality of the provider’s customer service. Many brokers provide a live chat option, and you can usually reach customer support via hotlines, e-mail or a contact form. In any case, you should be able to contact a member of staff free of charge.
Equally important are the languages spoken by the support team. Quite often, the support staff are English speaking, but many brokers offer other languages too. In addition to conventional support, some brokers provide a VIP service. Depending on your account or status, some providers may also provide you with a personal account manager.
COMPETENCE, ACCESSIBILITY AND RESPONSE TIME AT A GLANCE
Although round-the-clock support may not always be available, there should at least be a way to contact support, according to your trading patterns. Of course, the competence of the support staff is crucial. In the areas of service and support, the very best Forex brokers are those that can answer questions professionally. You should not have to wait longer than 24 hours for a written response by email.
PAYMENT METHODS AND CONDITIONS FOR DEPOSITS AND WITHDRAWALS
You will need to deposit money into your trading account before you can start trading and, if you are successful, you are going to want to transfer your profits to your private bank account. So, of course, it is important to consider the possible payment methods.
Most Forex brokers offer the following:
- Credit card
- Bank transfer
- Online payment services such as Neteller or Skrill
Credit card is still a popular means of payment, as transactions are uncomplicated and processed within a short time. Bank transfers are considered very secure, but processing usually takes several days. Many brokers also allow deposits and withdrawals through online payment services such as Skrill, Neteller and PayPal – payment methods that are popular because of their transaction speeds.
When evaluating a broker, it is important to consider the possible fees and limits. It may well be that payouts, for example, are only possible from a certain amount. Some providers allow only a certain number of payments per month, so each additional transfer may come with a fee. It is also important to research the ways in which payments can be made. It is often the case that brokers will only allow withdrawals by the same method that the deposit was made.
Additional offers can be crucial in a Forex broker comparison
Many brokers provide useful additional offers to their customers – starting with education and training. Only those providers who have well-developed education and training offers are deserving of the ‘Best Forex Broker for Beginners’ award. Even experienced traders can benefit from offers such as webinars or video tutorials. Some brokers also offer seminars, while others limit themselves to a blog with tips or even a trading academy. Offers such as an economic calendar or market analysis tools are also useful.
Forex demo account – useful for beginners and experienced traders alike
If you have no previous Forex experience, you should ideally look for a broker with a Forex demo account. This provides newcomers with the opportunity to get to know the platform and make their first trades without investing their own money. It is often possible to use the demo account in parallel and also before opening a trading account. Even if you are already registered with a broker, you can use a demo account to optimise your trading or to test a new strategy.
Security, regulation and deposit insurance
Regulation and deposit insurance are important issues, yet, they are not a guarantee that you will get a reputable Forex broker. It is not possible to completely exclude the possibility of Forex fraud in trading, but you can be sure that regulated providers are licensed to offer their services on the market. The authorities responsible check brokers' work at regular intervals.
To confirm that a broker is regulated, you can look up the directory of the authority specified on the broker‘s website and examine their licensing information or possible stock market quotations, amongst other details. It is recommended that you also find out about the amount of deposit insurance offered. This provides additional protection and secures client funds in the event of bankruptcy, up to a certain amount.
With regard to your personal data, if you are worried about Forex fraud, there are a few checks that you may inevitably wish to perform. In a provider comparison, you should make sure that the data transfer is always encrypted. By choosing a secure password, you can also contribute to your own personal data security.
Trade press opinions and awards
Trade press information about a broker can be helpful in a broker assessment. Forums, on the other hand, are less reliable. Positive opinions might be expressed about payments, while negative contributions could be based on frustration due to personal misjudgements in trading.
Well-known brokers who have been on the market for some time or who have already received awards such as ‘Best Forex Provider’ are often mentioned in the press. Many brokers link to media coverage on their website. Take advantage of this opportunity to gain an overview of the current media coverage of the broker and the awards they have won.
Even if a broker has been named ‘Best Forex Provider’ in the past, it is worth seeing if there are any more recent awards. Such awards are important for brokers to build trust with their customers. Various magazines subject brokers to a test, and give annual titles and awards for Forex trading. The platforms, broker support services and security are regularly scrutinised as well. Awards are certainly a good means of assessing a broker – you can usually find a broker’s awards listed on their website.
The foreign exchange market – one of the largest markets with steady development
The Forex market is considered to be particularly fluid – it is one of the largest markets and continues to grow steadily. The daily trading volume is large, and forecasts predict a strong continual development for the foreign exchange market. It is hardly surprising that trading in currency pairs has been profitable for traders for many years – and at the same time, the number of brokers trading from home is steadily increasing. For many investors, there is no doubt that it is possible to be able to quickly generate high income if successful.
Forex trading itself is easy to understand; a trader estimates whether the prices of selected currency pairs will rise or fall and then opens a trade. Nevertheless, the risk of losing the capital invested is very real and should not be underestimated.
Assessment of further development
The growing interest in Forex is beneficial to the market. Added to this are cryptocurrencies, which are slowly but steadily shaping Forex trading conditions. Exotics and Minors are becoming more important as well. The increasingly diverse trading opportunities available on the various trading platforms appeal to beginners and experienced traders alike. For these reasons, it can be assumed that liquidity on the foreign exchange market will continue to increase in future.
Using the Forex broker comparison to find the right provider
A valid Forex broker test is based on various criteria. In order to lay the foundations for Forex trading, you need a reliable broker that suits your individual requirements. In addition to financial aspects such as the minimum deposit, trading costs and possible additional fees, the trade offer is crucial. It is advisable not to focus solely on the number of tradable currency pairs, but also to consider exotics and minors. A look at other trading opportunities cannot hurt either – the trading of stocks or cryptocurrencies could also be considered. On AskTraders you can find a comparison for other products, too, such as our crypto broker comparison.
Once you have found a broker with a suitable trade offer, you can use other criteria such as additional offers, market analysis options or customer support to assess whether the provider really suits you. Our objective reports on individual Forex brokers are based on the criteria mentioned above and can help you to obtain a comprehensive overview of the current offers on the market. Take advantage of our reviews and do not hesitate to use offers like a Forex demo account to get an even better feel for the broker, their platform and decide who you feel is the best Forex broker for you.