How to choose a broker to invest in the forex market?

The Broker or Broker is the financial institution in which we are going to deposit our funds to open an account and invest in Forex.


You have to take into account a number of factors to make the right decision since there are many brokers in the market and each offers a range of variables that must be taken into account.


Below we will describe the main variables that should be taken into account when choosing a broker to invest in the currency market.


1. The capital of the Broker: It is important to know the capital of the Broker because at the time we make a profit we have to be sure that the Broker has enough funds to pay us. In general Brokers do not disclose this type of information, but you can find out the payroll of employees who work for the broker, how big the organization is, how many clients operate with it, and several more factors may come to our notice.

2. Market and products offered: We have to know in which markets we plan to operate, and in what products we want to invest. There are brokers that offer foreign exchange, commodities, futures, among other financial instruments.


3. Commissions: There are brokers that do not charge commissions and that their profit comes only from the spread or exchange differential (difference between the purchase and sale price of an asset).
If we choose a Broker that if it charges commissions, we have to take into account what those commissions are; can be commissions for the purchase and sale, commissions for withdrawals of funds, commissions for maintenance of accounts.


4. Spread: The spread as we said before, is the difference between the purchase and sale price. Investors always prefer a small spread to pay less to the Broker. Spreads can be fixed or variable. If the spreads are fixed, this means that in times of greater volatility they will always remain fixed. If the spreads are variable, then in times of less volatility the spread is lower but in times of greater volatility, the spread will be greater.


5. Services: Brokers usually provide a number of services that can be of great help to traders. Technical analysis, fundamentals, recommendations, news and graphics are usually the key. Beginning investors have to take this service very seriously as the customer managers in Spanish can assist in all these issues.


6. Customer Service: We have to verify if the Broker we choose there are people who speak Spanish and can help us with any inconvenience or doubt. There are Brokers that also enable communication through chats, telephone assistance, email, and all this during the 24 hours. Besides of course those who assist us must have knowledge in financial markets.


7. Execution: One of the most important variables to take into account when choosing a Broker is the speed of executions. The best thing is that the execution is automatic, then when we want to enter or leave the market at a certain price, generally the Broker respects.


8. Stop Loss and Limits: It is necessary to find out if the broker respects the Stop Loss and limits that we place in our platforms. It is important as these are the limits of profit and loss that we allow ourselves.


9. News: Not all brokers allow their traders to trade in news feeds as the market is very volatile. For operators that operate with news, this is one of the most important points to ask.


10. Regulation: There are official entities both nationally and internationally that regulate the operation of brokers. Broker regulation is not a 100% guarantee, but it can help. The most important regulatory agencies are the NFA (United States), CFTC (United States), FSA (United Kingdom) and the CNMV (Spain).


11. Fund Withdrawals: Each Broker has different times to respond to our requests. The security of our funds is a must, therefore receiving the requested funds on time is essential. It is also good to corroborate that the bank with which the Broker works is known and respectable.


12. Trading Platform: There are different forex platforms in the market, it is important to first try out the free demo, see which tools the platform has, and if it is complete. In addition, platforms can be download, no download, for mobile phone, and more.


13. Investment: We must find out what the minimum deposit required by the Broker is if we are interested in investing small amounts.


14. Broker Type: There are different types of brokers like Market Makers, NDD, Dealing Desk or ECN. The differences between them are as follows:
- Market Makers: they are market makers.
- NDD: "No Dealing Desk". No intermediary operating room. The operations are executed automatically.
- Dealing Desk: They have an operating room that intervenes in the operations that the Investors do.
- ECN: "Electronic Communications Network". They operate directly connected to the market where market makers, banks and traders are operating offering the best bid / offer prices.

In short, it is important to choose a broker who is serious and professional and suits our needs.

Tips for Choosing a Good Forex Broker

In the 70's the Forex market was created, and in the last 10 years it has experienced strong growth thanks to the internet and new technologies. There are studies that indicate that there are daily transactions in the Forex market worth 4 trillion dollars (the New York Stock Exchange moves 50 times less daily).

In addition, individual investors and traders have grown very fast, thus becoming one more participant, although very small in comparison with the Central Banks, commercial and investment. With this great growth in the Forex market have emerged new investment brokers with the aim of attracting retail investors. There is so much broker offer that it is difficult to choose a good broker.

A broker is the financial intermediary in our operations, that is, it is the intermediary between buyers and sellers. 10 tips that you would have to consider to choose a good broker in the Forex market are:

1. Avoid welcome gifts

Avoid all those brokers who offer welcome gifts type 30% welcome bonus. In most cases if you stop to read the fine print of the conditions, you realize that in order to withdraw the bonds or the money itself, you are more likely to end up losing all the money deposited. One fact to keep in mind is that if you want to withdraw your money and do not meet the conditions (almost always), you will be deducted from your account the bonus received or the amount of the gift made.

      2. A solid and respectable broker

Choose a broker with a lot of equity, because the greater the capital of the firm, the greater the protection of its funds. To determine the vitality of a broker, you should look at the number of employees you own. If you are a solid and respectable organization, you will have hundreds of employees, who will be able to assist you 24 hours a day. It is also likely to have hundreds of thousands of accounts. If the firm has few employees it is likely that they have a small capital or they are unable to provide the personal assistance you need.

       3. Regulated Broker

It should be noted that the broker is regulated by a competent entity such as NFA (United States), FSA (United Kingdom), FINMA (Switzerland), among others. We must avoid all those brokers who are in tax havens. Brokers in Europe, Canada, Hong Kong and Australia have adequate regulations, and capital requirements are high. If your company is in a third world country, the current regulations may not be adequate.

        4. Greater Leverage

Leverage can help you reap considerable profits but can also cause huge losses. It is advisable for a broker to provide the leverage so that it can operate effectively in the forex market. Of course, greater leverage means better opportunities for you. Some brokers offer a leverage of 100: 1, which means that for every dollar in your account, you can borrow and use up to € 100. Other brokers offer up to 250: 1. When choosing a broker, you have to take into account the leverage offered, as this could be your ally to win big.

        5. Account Types

It is advisable for the broker to offer different types of forex accounts. For example:

•   "Mini" accounts require a minimum margin or equity that could be $ 250 onwards. With this type of account, you can trade in forex but the level of leverage is lower.
• "Standard" accounts, which require a minimum of $ 2000. This type of Forex account allows you to open larger positions.
•   The "Premium" account allows the opening of even greater positions.

       6.  Real-time information and good graphical tools

Facilitate daily decision making, helping to choose a more optimal investment.

       7.  Have a free demo account

It is advisable that the Broker has a free demo that operates in real time because it allows you to practice and learn from real or fictitious money the features and services of the broker you want to contract before opening a real account.

      8.  Avoid so-called brokers Snipers or Hunters

These brokers often buy or sell based on preset points, usually perform these maneuvers to increase their profits. Avoid this type of corridors. To know who these brokers are, you must communicate and interact with other operators online or through forums.

      9.  Automatic execution


One of the most important variables to keep in mind when choosing a broker is the speed of executions. The best thing is that the execution is automatic, so when we want to enter or leave the market at a certain price, the Broker usually respects it.

      10. Do not pay spot fees


Forex traders do not pay commissions for placing orders, unlike those that operate in futures markets. Actually, a Forex broker is a simple broker, not a broker or broker itself. Therefore, they obtain benefits through the Spread, this is the difference between the value of the "bid" and the "ask".

      11.  Remember the differences between hiring a market maker and an ECN (Electronic Communication Network)

You have to take into account the differences between an ECN and a market maker to know which type of broker can best meet your investment needs.

It should be remembered that: price volatility in an ECN is often higher than in a market maker's network, ECNs often do not allow leverage, unlike market makers. In addition ECNs usually give the prices that their liquidity providers mark, with the same exact margins, and then charge a commission for each round round transaction. However, market makers can open an account with fewer resources and their platforms are easier to use.

Do not forget that the market maker or market maker covers the position with other operations or does not cover it, so it assumes the risk contrary to yours. That is, if you win the market maker loses, which creates a conflict of interest.

        12.  Good customer service

The customer service is very important because they will help you to resolve any possible incidents that you may have. It is advisable to look for a broker to solve them as quickly as possible, not to hinder the withdrawal of funds, which does not have many complaints from other investors. To know the opinion that other investors have about the brokers in the market you can consult and participate in forums.