When trading stocks and forex, you want to focus on executing your strategy and not worrying about the legitimacy and security of your broker.
While it’s easy to find and sign up to a third-party intermediary due to the vast number of brokers online, many of those operating are not what experts would deem to be “good” brokers. This is a problem as a quick decision can result in frustration, and even the loss of deposits and funds. So, what features and software should an ideal broker have?
Licence and regulations
First and foremost, every reliable broker needs to have some form of regulation, either from a major regulatory agency such as the Financial Conduct Authority (FCA) in the UK, the Security and Exchange Commission (SEC) in the US, or a relevant body in another country. These financial regulators set out rules and principles that brokers must adhere to in order to operate.
By selecting a broker with licences and regulations, you will have the peace of mind that they will not cease to operate and steal your funds. Even if a regulated broker does suddenly become insolvent, you will still be able to get your money back. Before selecting a broker, take a look at how they are regulated and double-check what measures are in place to safeguard your deposits.
Affordable fees and charges
When buying currency pairs, you will be charged a “spread”. This is how brokers make money by facilitating your forex trade. The same process occurs for other trades. Whatever assets you buy and sell online, brokers will charge a fee or commission. The amount will vary depending on the asset and markets you trade in. Good brokers will charge fair prices for the services they offer and won’t attempt to rack up fees with hidden requirements and features.
Brokers might also charge you when transferring funds or when you close an account and move to another broker. There can also be fees for inactivity, subscription services, annual or monthly maintenance and to use advanced trading platforms. A good broker will be clear and transparent about these charges, but always check beforehand so that you are fully aware of the account fees you need to pay.
Excellent trading features
Now you have made sure your money is safe and that you won’t be shocked by surprise fees, you can start looking at the features and platforms that a broker offers. The MT4 trading platform, such as the one covered in the AAFX Trading review from a reputable financial consultant, is popular with new and experienced traders alike, especially when combined with a range of third-party tools.
The platform should also be suited to your needs and have an intuitive, user-friendly design. Testing, executing and closing trades is a challenge in itself so you don’t want to be fighting with the software to get things done. All the features and functions should be easy to find and simple to operate. Finally, make sure the broker you are signing up to actually has the securities you want to trade and has access to the markets you want to trade in, either local or foreign markets.
Great customer support
High-quality brokers also offer educational resources and materials, which are backed up by 24-hour customer service support via live chat, phone and email. Basically, you want to make sure that you have everything at hand to trade with ease and a channel to get in touch with the broker if anything goes wrong or if you have questions. Check for demo accounts too. Beginner traders can use demo accounts to hone their strategies before advancing to real money.
Quick deposits and withdrawals
Finally, before you select a broker, make sure that depositing and withdrawing funds is quick and painless, especially if you require currency exchange to trade forex. Brokers typically offer a range of payment methods, which include bank transfers, PayPal and debit and credit cards. There are now brokers that accept cryptocurrency too. Knowing what you require from transferring funds will enable you to pick a third party that aligns with your specific preferences. This can eliminate frustration and costly workarounds.
The withdrawal method should also be efficient and completed within an adequate time frame, and available for different currencies, including the British pound – if you are trading in the UK. Everything covered in this article contributes to an excellent user experience and should be viewed as a baseline for a “good” broker. Armed with this knowledge, you can make a safe choice when selecting a broker to make trades.
Read more:
What features and software do the best brokers offer for traders?
