1) Is the broker I want to use regulated? This is the first question to ask yourself and there should be no doubt that they are. All regulated brokers are required to submit financial reports to regulatory authorities. If not, the authorities may fine the brokers or even terminate your membership. These rules force Forex brokers to keep financial reports.
Each broker is regulated by local regulatory authorities. For example, if a broker is based in the United States, they are regulated by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). Swiss brokers, however, are regulated by the Swiss Federal Department of Finance (FDF). Using a regulated broker also protects investors because they can dispute resolutions.
2) How are the trading conditions? This question is about the trading conditions and special features of the trading platform with a Forex broker. Some of the most important factors include:
-Spread: The lower the spread on currency pairs, the more favorable the conditions for both traders and investors.
-Platform Execution: This term refers to the speed and consistency with which trades are executed. Many brokers promise fast and transparent executions under normal market conditions.
– Fractional Trading: Some brokers may allow investors and traders to trade on a fractional basis. For example, instead of allowing you to trade entire lots of “100,000 units”, they allow you to trade “163,345 units”, which is useful when you take trades that risk a certain percentage of the balance on each trade.
-Security of Funds: It is important to ensure that your trading funds are placed in a segregated account or at least insured for safety.