When it comes to starting forex trading or looking for a new forex broker, a forex broker comparison is a must before settling with one of the forex brokers. In forex trading, the success of the trader usually depends on the comprehensiveness and the facilities offered by the broker. There are many factors one should consider when performing a forex broker comparison.
First of all, a forex brokers list should be obtained from a known and respectable source. The user will be selecting brokers from this list in order to do the comparison. On the Internet, hundreds of such forex broker lists are available for free download. Sometimes, these lists include belief comparisons as well, making your life easy when you need to compare forex brokers.
Let’s look at vital factors that should be considered when comparing forex brokers for beginners:
Forex broker reviews should play a key role when it comes to the comparison process. There are hundreds of forex related forums and blogs on the Internet. These forums and blogs usually contain first-hand information about brokers. The real users of such brokers offer their experience and opinion on the broker services that they have worked with. The potential trader can read as much as postings and get a rough idea about the best services offered in the industry of forex trading.
Minimum deposit required to start trading is one of the main features of brokers. Some brokers allow users to open an account without any money in it and some others may demand the initial deposit to be up to $5,000. Usually, people prefer brokers with a moderate requirement for initial deposit such as $250. This is due to the fact that free or low amount accounts are offered to you as mini or micro accounts when you are restricted to do big deals in the market.
The forex broker rating is one of the indicators about the broker’s quality of service. There are many finance related websites and magazines that offer such rating systems. In the rating, there are many parameters considered, and the rating is given, considering all of the parameters. Therefore, users can rely on an unbiased and transparent rating system when it comes to forex broker comparison. Sometimes, users are misled by fake rating systems offered by some forex brokers promoting and giving a higher rating to themselves.
A broker commission is the next important factor that should be considered in forex broker comparison. Usually, forex brokers do not charge fees for providing you with live market information or any other transaction fees. Their only charge is the commission, and it is calculated based on the bid and on the asking price on every successful trade. Therefore, this is a good procedure from the end user’s perspective. In addition to this type of brokers who charge you a commission, there are other brokers who are commission free. The catch is that the latter category of brokers increase the spread you need to pay.
Broker maximum leverage plays a key role in forex broker comparison. There are many ways of explaining this, but let’s try to stick to the basics. Generally speaking, the leverage represents return on the investment and the risk exposure of the user. If a broker offers a higher leverage, that means the return of your investment could be high but it comes with a great risk of losing money as well. The lower leverages are more conservative, giving you less return to your investment but minimizing your risk exposure. Therefore, the user needs to select the type of trading he / she wants to be engaged in and then select a broker with appropriate leverage.