With a daily turnover of more than USD$5 trillion, the foreign exchange market (Forex or FX) is one of the world’s most traded and liquid marketing. As the world’s largest financial market, foreign exchange marketing now has trading platforms and brokers available 24/7, which makes FX the most accessible market.
Unfortunately, Forex’s accessibility can be considered a double-edged sword. With plenty of online platforms, investors––both beginners and experienced ones––are finding it difficult to choose a platform that can suit their trading styles, budget, or needs. Fortunately, with the right tips, you can sieve any illegitimate forex trading platform, giving you a much shorter list.
To help you out, here’s how you can choose a Forex broker that’ll complement your needs and preferences as an investor.
Regulatory compliance
Before anything else, you want to ensure that the Forex trading platform is reputable and credible. Regulatory compliance is one of the best ways to gauge the platform’s reputation and credibility. In Australia, for instance, a trusted Forex broker is always a member of the Australian Securities and Investment Commission (ASIC). Keep in mind that each country has its own regulatory body.
That said, even if the platform has a captivating and flashy website, it doesn’t mean they’re legitimate. If a trading platform has indeed complied with any regulatory bodies, it’ll always emphasize its credentials, such as the fact that they’re under Commodity Futures Trading Commission (CFTC) regulation, on its “About Us” page. FX for corporates in particular will always have these readily available on site.
Ideally, as you’ll be depositing your hard-earned money on the platform, you only want to deal with platforms that are duly regulated, such as the ones offered by Fusion Markets––specifically Metatrader 4.
Spreads and commissions
Now that you can guarantee the platform’s reputation and credibility, the next thing to consider when looking for a Forex trading platform is the cost of their services. The cost should include how the platform sets the commissions (a fee determined by the broker) and spreads (refers to the difference between the bid and ask prices).
Furthermore, since spreads vary from one broker to another, you want to compare the exact rates before fully committing to a specific platform. At best, you want to find a low-spread platform, so you’ll pay less whenever you make a trade.
Commissions, too, vary from one platform to another. But this type of cost is cheaper than spreads. In fact, some platforms even offer commission-free trading. Hence, consider the rules set by a platform concerning commissions so you can save a few bucks.
Payment methods
Once you’ve assessed the costs (spreads and commissions), the next step is determining a platform’s payment methods to its investors. Typically, a Forex trading platform will allow its investors to withdraw and deposit funds via their credit or debit card, bank transfer, or platforms that offer online payment methods.
You want to choose a platform that has a suitable payment method for you. For instance, the platform should accept this payment method if you’re going to withdraw and deposit funds through your credit or debit card.
Demo accounts
Most, if not all, brokers offer access to a demo account, which allows investors to open trades using virtual funds. Even if demo accounts expire around a month or so, if you’ve opened an account to a Forex trading platform, there’s a huge chance that you’ll still have the option to use a demo account.
A demo account is helpful for investors as they can test the platform’s pricing, products, and service. Once you get the hang of Forex trading, you can even use a demo account to test new trading strategies, helping you save money.
Multiple markets to trade
Successful investors always urge other investors to diversify their portfolios. Hence, even if you focus on currencies, a platform that offers a variety of markets to trade will give you convenience when you decide to explore other markets. This way, whenever you find a trading opportunity in cryptocurrencies, oil, or the stock market, you can easily invest in the right market on a single platform.
Aside from currencies, it’s best if the platform offers the following markets to trade in:
- Share CFD (Contract for Difference)
- Cryptocurrency CFD
- Commodities, like oil, gold, silver, etc.
- Stock indices
Bottom line
The right trading platform will significantly affect your Forex trading journey. For instance, having confidence in your trading platform will allow you to study other Forex strategies, as you’ll no longer worry about the safety of your investment.
Thankfully, the factors above will allow investors like you to choose the right Forex trading platform. All that’s left now is your due diligence to allocate some time for research.
References
- Kathy Lien, “The Foreign Exchange Interbank Market,” Investopedia, January 29, 2022, www.investopedia.com/articles/forex/06/interbank.asp
- Babypips, “Forex Regulatory Organizations,” Babypips, n.d., https://www.babypips.com/tools/forex-regulation
- Jitanchandra Solanki, “Top Financial Markets To Trade In 2022,” Admiral Markets, July 25, 2022, ttps://admiralmarkets.com/education/articles/general-trading/financial-markets-traders-should-know-2
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
