The choice of a broker in Forex is a fundamental step in order to operate safely and professionally. A serious company can offer all the tools necessary to operate in the best possible way, ready to answer any questions about the service and its operation.
How to pick a Forex broker
When you decide to trade Forex, as well as on all kinds of financial markets, you have to do it through a broker or a bank. Intermediation through these subjects is mandatory for a simple reason: they are authorized middle men.
The difference between the electronic stock exchange and the Forex market is the difficulty of finding banks willing to invest on currencies on behalf of clients, so if it is the Forex you are interested in, in 99% of cases you’ll have to contact an online broker. For years, for example, the only bank to have offered the option of operating on the Forex through its own platform was Fineco.
Today this situation has improved, above all in terms of management costs and operational potential (range of choice, for example). For example, there are other excellent Forex brokers such as 24option, one of the absolute leaders in the sector along with Plus500, IQ Option, and Trade.com.
Features and conditions to be kept in mind
Now let’s explore which details to pay special attention to when choosing a broker.
Regulations and licensing (effective)
First of all, the most important thing to check is whether or not the broker is regulated and licensed o operate in Italy. To do this, visit its official site and scroll down to the bottom of the page. There you’ll find regulatory information: regulatory body and license number. Sometimes, the Consob registration number is also listed, even if it isn’t a requirement to list it. To check if a broker is registered with Consob, just see if the company that manages it is among operators registered on the official Consob website. This verification process is a bit tedious but we have done it for all the new brokers we list on our site.
Regarding the regulatory body, most online brokers operating in Italy are regulated by CySEC, the Cyprus authority, since most broker companies are based in Cyprus.
Demo account (better if it doesn’t require a deposit)
A very practical and undoubtedly essential factor to consider is the possibility of practising with a demo account. The demo account allows you to operate within the same platform as a real account but using virtual money instead. This is the absolute most important tool for learning.
Forex product offerings
If you want to trade Forex online, you’ll need to be sure that a particular broker offers CFDs that are right for you. By now, all brokers offer Forex products, so in this respect you should never find any hidden surprises. The brokers we select all offer quality Forex trading.
However, if you want to trade on a very niche currency pair, for example, problems may arise. To see if a broker offers the currency pair you are looking for, visit their official website and then select “tradable instruments” (or similar item) and then “Forex” (or similar item).
Cryptocurrencies are not to be considered part of the Forex.
A more technical factor is given by the spread. This varies depending on the broker and, within the same platform, depending on the currency pair.
The narrower the spread, the more convenient it is. For this very reason, if you have a preferred currency pair, you could evaluate the size of the spread offered by the different brokers you are evaluating.
The spread, as we saw earlier, consists of the difference between the bid and ask price. This is applied to the opening of a position and represents the CFD broker’s service fee.
Let’s talk about minimum deposits. It doesn’t have to be extremely low, but it certainly shouldn’t be too high either. For example, 100 euro is absolutely acceptable as, in order to have a better balance, it is necessary to evaluate more operations. Operating with less than 400-500 euro is not advisable, but in any case this depends solely on you. If the broker offers you the option of operating with 100 euro, it means that it is attentive to every type of customer.
Along with the minimum deposit, we’ll include the deposit and withdrawal methods offered. These days all methods should be offered, both virtual ones like Paypal, traditional ones like credit or debit cards (Postepay), and old school ones like bank transfers.
Assistance in Native language
The fourth consideration to keep in mind, also very important, is the option of obtaining assistance in your native language. If you need to ask for information or resolve any doubts, you won’t need to necessarily know English. A good broker has a customer service for all the countries in which it operates and in different ways including email, telephone, or via live chat.
We’ll explore more technical elements further on in Lesson 5.
Go to the next lesson – Technical Factors in Choosing a Broker