Before opening a Forex account, there are some questions you need to ask and some features you need to carefully examine. Everyone has unique needs, and every broker caters to different ones. The longer you are part of the trading world and the more time you spend testing before opening an account, the more familiar you will be with Forex brokers, and the less likely you’ll be to make a mistake when selecting yours. Considering however that you will need to demo test on your new broker’s platform for months before going live, you probably want to figure out what broker you’re going to use early on in the process. Here are some things to look for and consider:
- Is the Forex broker registered with the National Futures Association (or other applicable regulatory agencies)? Is the broker accredited by the Better Business Bureau?
- How long has the broker been around? What kind of track record do they have? Check out customer reviews — take them worth a grain of salt in some cases. Some reviews are dishonest (traders love to blame brokers for their own failures), but others may give you a good idea of what you’d be dealing with.
- How is the broker doing financially? You don’t want to sign up with a broker who is at risk of going under.
- How do you add or remove funds from your Forex account? How long can you expect it to take, and are there any minimums you should be aware of? Since this is your money it is very important that it is accessible!
- Find out how the broker makes money. Are the spreads fixed or variable? How do they compare with the spreads charged by other Forex brokers? How much can the spreads expand during volatile times? How much slippage can you expect? Do you need to pay commissions, or are the spreads the only fees for trading? Does the company charge «maintenance» or other miscellaneous fees? Is there a minimum required balance or a minimum required number of trades per month?
- Does the broker offer the leverage you need? How does the broker handle margin calls? Some brokers give you a warning — others just close your account. There are many ways this issue can be handled and it is extremely important for you to know all the details.
- Do you need to trade a certain minimum lot size? Or can you trade as much or little money as you wish? This is especially important for traders who do not have a substantial amount of money to fund their Forex accounts.
- Will the platform be sufficient for you? You’ll be demo testing to make sure that you’re satisfied with the platform and that the broker performs at the level you hoped, but a cursory look can tell you whether the platform is likely to cut it or not. Don’t forget that you can use another charting platform to plan your trades, like MetaTrader. You’ll still be executing them with your broker’s platform.
- Test out customer service. Ask questions while you’re testing to make sure that the company responds quickly and is friendly and helpful! You may be used to poor service at your bank, but good Forex brokers offer a much higher standard of service, so look for it and demand it.
If you have any comments regarding opening a Forex account, please feel free to post them here.