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  • The Forex market is a decentralized global marketplace where the currencies of all countries trade. That being the case, traders must choose a safe and reliable Forex broker to help them conduct their trading activities. However, as the number of Forex brokers keeps growing, choosing a reliable Forex broker becomes more difficult, as it requires proper research. The first step in a trader’s research is to find out if a particular broker is trustworthy. So what requirements should a Forex broker possess? In this lesson, we'll highlight five tips for when choosing a Forex broker in today's competitive marketplace.

    1. Is the Forex Broker Regulated?

    The regulatory status of a potential brokerage firm is the first priority for traders when choosing. Checking the credibility isn’t that difficult, as there are regulators around the world that have online registries where you can check if a broker is licensed with the regulator or not. Also, these regulators regularly publish warnings to notify the public about fraudulent brokers in its jurisdiction. For a Forex broker to offer its trading services to traders in a specific country, it needs to abide the law and rules of the regulator in that region. Therefore, these regulators require all Forex brokers to operate in strict compliance with the laws and standards laid down in their region. If a broker fails to comply with these regulations set out by the regulator, then the broker can receive a fine, warning or a total ban from the region. Below, we have listed some of the regulators and corresponding countries:

    • United States:

      Commodity Futures Trading Commission (CFTC), Security and Exchange Commision (SEC) and National Futures Association (NFA)

    • United Kingdom:

      Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)

    • Cyprus:

      Cyprus Securities and Exchange Commission (CySEC)

    • France:

      Autorité des Marchés Financiers (AMF)

    • Australia:

      Australian Securities and Investment Commission (ASIC)

    • Germany:

      Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)

    Most brokers that are licensed by one of these regulators, are proud to show their license on their website. Hence, if you do a review of a broker’s website and can’t seem to find its regulation then it should be considered as a red flag. At Forex4you, we are proud of our license and the certificate can be found on Forex4you’s website.

    2. Easy to Deposit & Withdraw with the Forex Broker?

    A reliable Forex broker makes it easy for you to deposit funds and withdraw your profits. The only reason Brokers hold your funds is to facilitate trading. So there is no other reason to make withdrawal process difficult for traders, but rather speedy and smooth. While account withdrawal and funding policies differs from broker to broker, account holders are allowed to fund their accounts via different payment systems. Of course, withdrawals can also be made through the same methods. However, a fee may be charged for each service.

    3. Forex Broker’s Capitalization Level or Overall Size

    Regulated Forex brokers have to comply with the strict standards of capital adequacy requirements, which are set out by the regulators. In other words, a Forex broker should maintain liquid capital that is above the amount required to cover all deposits placed by clients. It will be a risky game if your funds are entrusted with a broker that has issues with capitalization. You can check your Forex broker’s capitalization by looking at the websites of the regulatory agency.

    4. How Is the Customer Service of the Forex Broker?

    Since Forex trading is done 24 hours a day and 5 days a week, a trustworthy broker provides different channels for you to contact them, to discuss any questions related to trading account, technical support issues or other concerns. A Forex broker usually offers contact through phone, call back request, e-mail, live chat, and social media channels. Furthermore, their customer support should be at least 24/5 available for its clients. When you assess a Forex broker and you see that they are don’t have a proper customer support than it is another red flag to note down. For example at Forex4you, our customer support is 24/7 available and in multiple languages.

    5. Which Trading Platforms Does the Forex Broker Offer?

    Most trading activities are conducted through the Forex broker’s trading platform. As such, a well-designed trading platform must be user-friendly and stable. Being the investor's portal to the markets, the platform should feature a variety of technical and/or fundamental analysis tools. As discussed in our previous less about “Trading platforms”, one of the most popular trading platforms is MT4, most Forex brokers offer this software for its clients. Some Forex brokers even go the extra mile for its clients and developed its own trading platform. This is the case with Forex4you, as we have developed a full-featured trading platform, specially built for our clients.

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