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6 Things You Should Ask Your Forex Broker
Written by: PaxForex analytics dept - Friday, 27 June 2014 0 comments
All forex traders need a good forex broker in order to be able to access the markets and trade. There are several hundred forex brokers out there to choose from and as forex trading increases in popularity more and more forex brokers appear which gives forex traders an increasingly growing choice. This also makes it harder to pick the right forex broker and it is important to ask some key questions in order to make the best choice.
Forex trading is the most popular form of trading and the daily turnover is roughly $5 trillion. Entry requirements tend to be lower than other forms of trading which is another reason why more and more flock to forex trading as their primary means to trade financial markets. The more traders enter the forex market the more brokers appear on the horizon in order to offer their services to traders.
Here are 6 questions you should ask your forex broker
Spreads – How tight are the spreads? This is very important as you advance in your trading career. You should pick a forex broker who offers tight spreads. One quick way to gauge that is by asking for the spread on the EURUSD currency pair which is the most traded and most liquid currency pair and therefore the spreads should be very minimal. You should get one below 1.0 pip.
Liquidity – What access to liquidity does your forex broker provide? A broker who is not liquid will struggle filling your orders and you will see plenty of re-quotes as well as very high slippage during market moving events which will have a negative impact on your trading. Make sure you pick a forex broker with deep liquidity. You may not find out how liquid a forex broker
is until you trade with them, but ask for their liquidity providers.
Filling of Orders – Are your pending orders filled at the price you enter? This is very important as every successful trader uses pending orders and rarely fills an order at market prices. A good forex broker will be able to fill over 99.9% of your orders at the price you specified. This holds true even during market moving events which cause price spikes. A good broker will still be able to bring your order to market and fill it.
Segregated Accounts – Are clients’ accounts as well as company accounts segregated? Ask them for which bank they use and try to verify if their accounts are truly segregated or not. Ideally the forex broker keeps their own accounts at a totally different bank than clients’ accounts, but that is not a must.
Tradable Assets – How many assets can you trade? Good forex brokers will be able to offer you more assets to trade which gives you a wider choice and allows you to diversify across more currency pairs. It also gives you access to more currency pairs which means that you will be able to realize more trading opportunities.
Withdrawals – How fast are withdrawals processed? Good forex brokers will process your withdrawal request the same day unless it is received after their finance department is closed for the day at which point it will be processed the following business day. A good forex broker never asks why you are withdrawing funds or gives you excuses why it may take longer; those are all red flags.
It may be very challenging to find a forex broker who will offer all of the above aspects, but Paxforex is one of the few which is able to deliver on all six points. Paxforex provides you with the infrastructure required so you don’t have to worry about it and won’t feel the negative impact of crucial factors. Trading with Paxforex allows you to fully focus on executing your trading strategy while you have access to a fully professional trading environment.