Financial markets offer investors and traders unlimited earning opportunities, but trading in these markets involves many related factors that can affect their trading results. One of the main such factors is the choice of brokers with MetaTrader 4.
A forex broker is, first of all, a partner to whom you can entrust your capital and freely invest it in various assets that will allow you not only to preserve it, but also to increase it. It is important to know that a broker is your hands and eyes in the market. It is the broker who shows you price quotes for goods and it is to him who you give orders to open transactions. Therefore, the issue of choosing a broker must be approached responsibly and with all seriousness.
Who is a broker? A broker is a financial organization that has the necessary licenses to conduct its activities and enters into transactions on the market on behalf of the client. Simply put, it is an intermediary between participants in financial markets and the markets themselves, and it is through brokerage companies that all trading on the stock exchange is conducted.
Choosing a broker – what is important to know
When choosing a broker, first of all you need to know his history, how long he has been on the market, what his reputation is and what licenses he has. This is the information that will allow you to form a superficial impression of the company. But in order to form a complete picture, you will need to study the service of the company itself.
The company’s service consists of the following main aspects:
- minimum deposit,
- availability of demo accounts,
- speed of execution of orders,
- methods of depositing and withdrawing funds.
By comparing Forex brokers and studying this information, you need to decide which of the points is the most important for you and, based on this, you can make your final choice.
The minimum deposit is the minimum amount that must be added to your account in order to start trading through a broker. Thus, knowing how much money is needed to start, you can figure out where to start.
Commissions and spread
Each broker receives a reward for the service provided. The remuneration can consist separately of commissions and spreads, or just spreads, it all depends on the broker’s conditions. Each broker’s website should provide detailed information on commissions and spreads; as a rule, you can find it in the “trading conditions” section.
A spread is the difference between the purchase and sale prices of an asset. Spreads can be either fixed or not fixed. If the spread is fixed, then its value does not change, regardless of market conditions, and the broker bears all the costs of servicing the client’s transaction. This makes fixed spreads often larger than non-fixed ones. Non-fixed spreads in a market with increased volatility can either increase or decrease; in this case, the client himself, at the expense of the spread, pays for the servicing of his transaction with the broker.
Make a comparison of the forex brokers on your list and carefully review and compare their commissions and spreads. However, remember that excessively small commissions and spreads do not always mean that this is a reliable broker , but rather, on the contrary, they want to attract you with cheap commissions and, in this case, the quality of service and reliability of the company itself may be worse than you expect . Spreads and commissions should be approximately equal, their difference may be due to the partner banks and liquidity providers of the broker, since they may all be different.
A demo account is an account where you can test your knowledge and ability to manage money in real time and in the real market, but without depositing your money into the account. It is important that the broker you want to choose provides the opportunity to trade on a demo account. Please note that not all brokers do this, but this is one of the important aspects of quality service from a brokerage company. After all, on a demo account you will test your strength in trading, you will be able to see your mistakes and eliminate them. This will help you understand the broker’s trading conditions in practice, not in theory.
It is also important that the broker has various advisors. We recommend that you choose a company that provides its clients with various analytics, trading signals and all kinds of trading tips. You can always use them. if necessary. They are especially useful for novice traders who are just starting to trade on real accounts. The absence of such a service indicates that the broker does not care about the fate of his clients and it does not matter to him how clients will trade, but the broker’s main income is commissions and spreads from clients’ trading.
If a company does not provide additional advisors in its service, then it is better not to consider it, since, most likely, this company is not reliable and its interests in the account of its clients are completely different.
An important criterion for choosing a broker is the leverage that the broker provides to clients. Leverage allows you to trade a volume that can significantly exceed your initial starting capital. It is the presence of leverage that has made online trading so popular today.
Judge for yourself, you can train on a demo account, but to test your strength and find out your level with real money, then with the help of leverage, you can enter the market even with an amount of $100. Agree – this is not much to find out your level and check the speed of servicing real transactions by the broker. With a larger investment amount, having leverage will allow you to apply different trading tactics and open many trades, which will increase your position size but also your risk.
Choosing a broker by asset class
Answering the question: “Which broker to choose for Forex?” It is also necessary to pay attention to which asset classes are provided for trading. An asset class is a single group of trading instruments. What unites them is that they have common properties, behave in a similar way on the market and act according to the same laws and rules.
The following are the most popular trading assets:
- forex tools,
- stock instruments,
- raw materials tools.
Forex is an international foreign exchange market. They trade currencies of different countries on it and it is the most popular among traders and investors, due to the fact that money is always in great demand and this market is the most volatile, which provides opportunities to participants.
Stock instruments are instruments that are traded on the stock market. These include company shares and international indices, which include shares of various companies. Indices can be either for a single industry or mixed.
For example, the S&P500 index of the American economy consists of the 500 largest US companies.
Commodity instruments are instruments that are traded on the commodity market. The most popular of them are food products, as well as gold, oil and grains.
The more trading instruments brokers provide, the better. Since such a variety of goods allows you to diversify your risks in one market with the help of other markets. For example, you can trade in the foreign exchange market and at the same time invest in a portfolio of shares in the stock market, this will allow you to diversify risks through shares in the portfolio.
Each broker provides its clients with the opportunity to trade online using a special program – a trading terminal. You can download it directly from the broker’s website. Today, the most popular online trading program is MetaTrader 4, although there are other programs as well such as TradingView.
The functionality of MetaTrader 4 is optimized for the broker, so if you download it from the broker’s website, it will already be configured for its trading conditions, which is convenient to use. The convenience of this trading terminal is that you no longer need any additional software to operate it, since all the most important elements for trading in financial markets are already built into it.
Let’s make a small conclusion. In order to make a choice of a broker, it is not at all necessary to be a professional in this matter; it is important to know what, first of all, you need to pay attention to. As mentioned above, the most important thing is to know the history of the company, check the facts about it, licenses. There are many sources on the Internet where you can find such information.
It is also important to thoroughly study the company’s service, find out what commissions and spreads are, because this is what you will pay, so to speak, out of your pocket and, therefore, it is important to understand what expenses you will have. In addition, you need to understand what the minimum amount is needed to start and what opportunities there are to increase the account amount.
Check with a company representative to see if they train their clients, accompany them in trading, or provide any support or not. All this will help you achieve your goals and work in consultation with professionals will be much easier for you than on your own.
Of course, test the methods of depositing and withdrawing money from the account, how quickly the broker does it and whether any obstacles are created in front of the client, especially when it comes to withdrawing money.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.