Questions To Ask When Choosing Online Brokers

By Author: Jemsh Smith
Total Articles: 39
Comment this article

After studying the market and creating your own system, whether manual or one of those currency trading platforms, you feel that you are ready to get your feet wet. Naturally, you are looking only for the best forex brokers in the market to boost your position and expand your account. Choosing one, however, can be difficult especially since there’s so many. Fortunately, you can shortlist the names by asking the following questions.

What is the leverage of the firm?

Leverage simply means the amount of money you are allowed to borrow from the firm when you open a position. This is subject to intensive monitoring by regulators to make sure nobody abuses this privilege. The numbers vary between online brokers though 1:50, 1:100 or 1:200. Generally, it’s not advised to be beyond 200:1 and anybody who offers you that position is likely breaking the rules and you are going to be complicit in hiring the services. To better understand leverage, say you are trading $1,000 ...
... … so with a leverage of 1:100 you are only required to pay $10. This is so you can expand your investments. Taken in another way, if your leverage is 1:100, your $1,000 investment just became $100,000. That means you gain profits or lose money quicker. You can trade as much as you want but when your account balance hits zero, the broker will then close all deals.

Is technical and customer support available 24/7?

You’ll never know when you may need a helping hand. The best forex brokers, however, offer technical and customer support to better manage your funds. How can you access customer service, is it by phone, online chat or e-mail? Are the technical support staffs knowledgeable in the forex market? Understand that the capacity of the customer support service is reflective of the quality of the broker you are dealing with. In the same token, you should also ask what type of resources or trading tools that are being offered. Is the graphical user interface easy to use? Are there updated news feeds or commentaries to keep you updated on current events? Is mobile trading available? You can’t always be on your computer so tracking your account with your mobile device is essential.

Is the brokerage firm registered?

Major financial centres like the United States, United Kingdom, Australia, Hong Kong, Singapore, Japan and Finland are all regulated to make sure all the transactions are above board and nobody is manipulating the system to boost profits. Typically, the biggest stock broker in their respective areas is registered and required to submit reports to the oversight body. Another thing you should look at is the management composition of the brokerage firm such as its transaction history, experience and the types of accounts it is holding.