Qualities and traits one should look for in choosing a broker are listed below:
1) Transaction Cost
Transaction costs are just a part of forex trading. Either you pay for the forex spread or you pay through commission. More reliable brokers are better so sometimes you have to sacrifice low transaction costs.
Security is the most important characteristic of a broker. When dealing with large amounts of money, you aren’t just going to simply hand it over to someone that claims they are reliable. Regulatory agencies from around the world separate the fraudulent from the trustworthy brokers.
3) Deposits and Withdrawals
Depositing or withdrawing your funds or earnings should not be a difficult procedure at all. Withdrawal process should be smooth and speedy.
Your broker should fill your order at the market price you see when you click buy or sell. At least this is the case under normal market conditions. If you are a scalper, it is even more important to have orders executed with lightening speed.
5) Trading Platform
Stable and user-friendly trading platforms are a must. Most activity happens through a broker's trading platform. Also find out if it offers charting tools and free news feed.
6) Customer Service
Problems sometimes come up, and you need your broker to be there for you at all times. Check to see if your broker has a 24-hour live support. This is just as important as how fast your broker executes orders. Some brokers will be friendly helping you set up an account, but then they seem to “disappear” when you need after sales support.
The term bucket shops came from back in the day when brokers used to put their clients phone-in orders directly in the trashcan after writing them down. Sketchy forex brokers that have “questionable” trading practices due unfortunately exist. Sometimes they have slippage only favorable to the broker, or frequent price misquotes.
People like this will lie about price movements and are usually greedy, money-hungry and unethical. They are rare nowadays with the improving regulations, but some do exist so beware.
Compare Price Feeds
Compare price feeds with other brokers. Subscribe to a second, third, or even fourth price feed. This way brokers can’t manipulate rates or widen spreads without you knowing about it.
You need evidence to make a case, so keep a detailed journal of all of your transactions. Taking a screenshot of all of your trades is also a great idea.
File Legal Action
Take legal action if there is a conflict with your broker. You can approach the National Futures Association (NFA) or the Commodity Futures Trading Commission (CFTC).
Good Trading Habits
Trading takes discipline. Even with all of the right tools, it is up to you, the trader, at the end of the day.
After you find the right broker, you can open up a trading account in three easy steps listed below.
Choosing an Account Type
First you want to choose between a business (corporate) account or a personal account. Select the account type whether you want a standard account, a micro account, or mini account. However, most brokers allow you to trade custom lots. Make sure you open up a forex spot account, and not a futures or forwards account.
Paperwork and forms vary with different brokers, so find out which documents your broker needs to verify you. Documents are usually provided in a PDF format. Make sure you know about all of the associated costs like how much a wire transfer will cost from your bank if that’s the funding option you want to use.
A confirmation email will be sent to you once your broker has all of the necessary paperwork. It will contain your login and password, as well as steps needed to take to fund your account.