Here we explore some considerations relating to the realization of which forex broker is best suited to your needs. In this game, you must protect yourself at all times: that includes your mind, body, and account balance. Nowadays, there are a multitude of forex brokers in operation, but not all are suited to you and your requirements: both as an individual, and as a beginner trader.
REGULATED VS UNREGULATED BROKERS
Some of the brokers in operation today are not regulated by any statutory jurisdiction within any region of the world. Such brokers must be avoided by any means necessary; as they present any trader (and more so beginner traders) with an above-average level of risk and uncertainty.
BROKERS AND FREE SIGN-UP BONUSES
Across various regions of the world, there are brokers who offer sign-up bonuses (such as additional funds) to new account holders. Such bonuses should be avoided by beginner traders at all cost, as it is often the case that such brokers would subsequently place special instructions or limitations on accounts and/or account holders that do accept such account-opening bonuses. Play the game straight; Its either you have sufficient funds to open a real forex trading account or you don’t. Avoid financial favours or incentives from brokers.
PROVISION OF DEMO ACCOUNTS AND MICRO TRADING ACCOUNTS
As previously discussed, there are some benefits to be derived from using demo accounts during the early stages of a trader’s development. And as such, brokers that offer demo accounts in addition to real trading accounts are of greater suitability to beginner traders.
Many beginner traders start their trading journeys with little funding, unrefined trading psychology, and little to no training. Micro trading accounts enable for such traders to experience most of the feelings and emotions associated with real forex trading (at the cost of a few cents or pence per tick), without any real potential of losing a small account after a few trades.
REGION OF RESIDENCY AND BROKER’S REGIONS OF OPERATION
Before opening an account with any broker, you ought to be aware of its regions of operation, and ensure your region of residency is within the broker’s declared sphere of operations. You can always get such information directly from brokers.
HEADQUARTERS AND CURRENT REGULATORY COVER
When assessing brokers for suitability, seek to identify where each potentially-suitable broker is headquartered, and its current regulatory cover. A broker may be headquartered in the Bahamas, for example, but be regulated by relevant statutory authorities in the United Kingdom, South Africa, Canada, Australia, or any other country. Ideally, one should either be resident in the country within which the broker is headquartered, or in a country that regulates the broker’s activities.
If you’ve identified a broker as being suitable to your trading requirements, but identify that it is headquartered and regulated by countries that are not your country of residency or citizenship, you must, at least, be able and willing to travel to the broker’s headquarter nation, should a need ever emerge.
POLICIES PERTAINING THE DEPOSIT AND WITHDRAWAL OF FUNDS
When considering which broker to work with, it is absolutely important to confirm policies regarding the methods, delays, and general processing of funds to be deposited and to be withdrawn. There are brokers who process such requests within twenty-four hours; and then there are those who take over a week to get started. Always seek clarity of understanding with whatever you intend to engage: from the onset.
How Many Forex Brokers Should I Use?
There are countless numbers of stories which attempt to link forex brokerage firms and nefarious activities; although some of those maintain a degree of validity, one should not uphold such stories as sole reason behind any decision to utilise multiple forex brokers.
As a beginner trader, there are a few considerations to be made prior to deciding upon an ideal number of brokers to be utilised. We introduce some of those below.
DEMO OR REAL ACCOUNT
If your immediate intention is to open and make use of demo accounts only, there is very little to be gained by maintaining accounts from several brokers. As the commencement of your ‘SAPA’ process should have revealed, the average beginner trader has a lot of unlearning and learning to undergo; and as such, any undertaking that adds no value towards your progression to competency ought to be side-lined.
IMMEDIATE PRIORITIES AND TRADING CAPITAL
In drawing from our prior discussion on ‘The Five Levels of Trading’, the immediate priority of every beginner trader includes the development of both psychological and trade-execution skills. This will require a lot of your time and dedication (both physical and financial) to achieve progress; and so, seeking to attain and utilise several real trading accounts, as a beginner, may only serve as distraction from what should be your real sphere of focus. Besides, if your trading capital is under $50,000, pick and stick with a suitable forex broker and channel all effort towards your progression.