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You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please let us know how you would like to proceed. Get in on the action of FX, the most traded market in the world, with a market leader. Sign up for a risk-free demo. Most Popular Forex Markets. We understand what traders need and offer sophisticated trading tools, competitive spreads and exceptional execution quality on over 80 currency pairs.
Typical Live Typical Live. Product Typical As Low As. Spreads will vary based on market conditions, including volatility, available liquidity, and other factors.
Nevertheless, these brokers must comply with a certain set of criteria before they can even be considered. First of all, you need to ensure that the broker can be trusted to handle your money. In addition, you also want a broker that can provide you with a reliable trading platform to trade with. Of course, there are also other factors that you look at such as the trading cost in terms of commissions and spreads, as well as account types available, customer support and other value added services.
The OTC market is largely unregulated hence leaving the field wide open for scam brokers to try and scam unsuspecting traders. Nevertheless, you can protect yourself by trading only with regulated brokers. Regulated brokers unlike their unregulated peers, operate within the strict confines of the regulations imposed by the regulatory authorities.
These regulated brokers are usually based in major financial centers around the world such as London, Singapore, Hong Kong, Tokyo and New York. Because forex brokers are operating in different jurisdictions, the regulatory requirements of each broker are different.
Nevertheless, there are certain requirements which are considered the industry standard and are followed by regulatory authorities from all over the world. Another standard requirement among regulated forex brokers in the industry is the need to maintain a specific level of liquidity to ensure that the broker has enough liquidity to meet their contractual obligations. For a UK based trader, the best option is to look for brokers which are regulated by the UK regulatory authorities.
It is financed by the membership fees collected from the members that it has oversight over. In addition, FCA regulated brokers are required:. The aim of this scheme is to compensate traders of the loss of the money in the event the broker runs into insolvency issues. Apart from regulatory oversight, another important factor that needs to be carefully evaluated is the choice of trading platform that the broker has provided.
Most brokers usually provide their traders with a selection in order to cater to the different categories of traders in the online trading community.
These platforms are usually in the form of a desktop application, web based platform or a mobile trading app. The platforms may also be proprietary built by the firm itself or for the firm or provided by a third party trading solutions provider such as MetaQuotes Software, the developer of the popular MetaTrader 4 platform. The next thing that you need to be concerned about is the trading cost.
This can take the form of commission charges or spreads or a combination of both. Most forex brokers in the industry do not charge commissions on the trades that they execute unlike in the equity market. Instead, traders are required to pay a small spread in lieu of the absence of commission charges. Depending on the currency pair, it is usually less than 5 pips for the most frequently traded currency pairs. With spreads, you want to know if the broker offer fixed or variable spreads. Variable spreads on the other hand is dependent upon the market conditions.
With this business model, the broker simply relays your orders to the interbank market where it will be matched. For this service, the broker usually charges a commission on top of the spreads that you pay on the interbank market. Usually the commission is based on a small percentage of the trading volume.
In addition to trading costs, check how much leverage is the broker offering. The leverage ratio is simply the amount of capital which you can borrow from the broker to increase your market position.
For example if a broker is offering a leverage ratio of 1: Take note that while it is possible to increase your profit potential with leverage trading, the risk of losing more than what you invested also increases when you use leverage. The types of trading accounts that are available vary from broker to broker. Brokers who are beginner friendly and cater to small time traders often provide their traders with micro and mini trading accounts.
These accounts allow traders to trade in amounts that are smaller than a standard trading lot. A standard lot is equivalent to a market position of , units of currency. In addition, different types of trading accounts have different benefits and privileges. The higher ranking is the trading account, the more privileges will the account holder be entitled to. The type of trading account that traders can open is also dictated by the minimum initial deposit. At the other end of the scale, we have the Premium or VIP trading account which usually requires a substantial amount of minimum initial deposit and can run into tens of thousands of pounds.
While it is easy to get distracted by all the bells and whistles offered by a broker, you should never neglect to check out their customer support services. This is because of the fact that no matter how experienced you are as a trader, there will always come a time when you will need the assistance of the customer support team.
When that time comes, you want to be able to get in touch with the support team without any hassles. Hence, check what are the methods that the broker has made available for communicating with the support team. In addition, take note of the hours that the support services are available.