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Seven Things to Check Before Hiring a Brokerage in Forex Trade

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Seven Things to Check Before Hiring a Brokerage in Forex Trade

Category: Financial Advisor

Choosing the perfect broker for facilitating online forex trade has always had people in a bit of a dilemma. But worry not, since this article could hopefully serve as a guide. There are a gazillion ways in which one could choose a suitable broker without getting swindled out of their money. Below are some tips which offer a direction for the same: (Points credit: www.easymarkets.com)

·         It is not worth getting attracted to a broker only based on the discounts it offers. You could consider hiring a full-service broker if you’re a beginner, or if you want to perfect your trade by honing it repeatedly. It is not for nothing that they’re said to be the best for people who are amateurs and need to build confidence and gain suitable market knowledge. As you grow to become a sophisticated investor, you can extend reliance upon your own wealth (when you feel that you can invest money in excess of your risk capital).

·         You need to keep one thing in mind: here, the keyword is availability. It is advisable to take several clicks at the website of the company at different times throughout the day, especially when it’s one of those times when the trading hours would be found at their peak.

·         One should actually choose a broker who would have the ability to provide flexibility when trade is being carried out. Although trading is a sort of craze with all of us, it isn’t always possible for us to hang around and check for new updates. You should actually check to see the other options that should be offered by the firm for the sake of placing trades. Other alternatives would include touch-tone telephone trades, fax ordering etc. A note of caution should be sounded here: you should make sure you make a note of the prices offered for these things; the prices will differ from platform to platform.

·         Carry out a thorough check on the background of the brokerage. It should be registered with the brokerage regulation authorities of your country, and it ought to be genuine looking. A lot of fraud brokerages get away with duping people by having glamorous websites that skilfully hide the fact that it (the website) isn’t any good when it comes to trade.

Don’t blindly go for a service which offers low prices. There’s a saying, “You do get what you pay for”.  A brokerage which offers high prices may actually live up to the standards. It’s ill-advised to open an account with a broker simply because its commission charges happen to be the lowest. Often in ads, there are small-font words and numbers which specify the services which you’ll be able to enjoy, in exchange for the exact rates you pay. Sometimes, there are hidden costs which are ‘implied’ subtly in the text of the advertisement. In most of these cases (of brokers offering extraordinarily low commissions), there exist higher fees in exchange for limit orders, trades and options over the phone with the broker that you talk to. You would find that the advertised commission rate might not universally apply to all types of trades, including those you want to execute.

·         Sometimes, ‘minimal’ deposits are really far from being minimal. You should carefully study the amount of initial deposit which is required for opening an account with the company. If the minimum balance threshold is particularly high, then it isn’t a good idea to stick with them. Of course, the definition of the term “minimal threshold” might differ from person to person (that is, investor to investor). It is important to set your own threshold and not stray too much beyond your budget, unless you’re trading with inherited money.

·         There are certain brokerages which offer things apart from stock and currency trading. These products might include CDs, options and futures.

·         One of the most important things is customer service. You should have your queries and problems attended and responded to within a short period of time. It’s the best, if they have a Customer Chat feature. In case they don’t, drop them a ‘test’ troubleshooting mail to check the speed of response.  

There is nothing more important than choosing the correct broker with whom you plan to conduct the trade. Hence, instead of choosing in a hurry and settling for anything that looks less than undesirable, look around closely and exercise great discretion. 

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