How to Choose a Forex Broker in Three Simple Steps

Every investor knows that diversification is an important weapon in the battle to protect your portfolio. The wider your range of investments, the smaller the risk of chaos …

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Every investor knows that diversification is an important weapon in the battle to protect your portfolio. The wider your range of investments, the smaller the risk of chaos in one market having disastrous consequences for you, so those in the know are eternally on the lookout for new trading opportunities.

The foreign exchange can have a key role to play in such a strategy. However, as with any other market, entry into a new investment field poses many challenges. The best way to negate these is with the help and advice of a talented and experienced brokerage firm like OANDA. Here’s how to find one in three easy steps…

Step One: Consider Your Currency Combinations

The first step towards choosing the right forex broker is to make a shortlist of those that offer your currency combinations. With thousands of different combinations to choose from, not every broker will offer your pairings, but this isn’t a reason to change them. Your best chance of success lies in selecting duos that complement your personality and strategies, and brokers that offer these will be the most likely to have a brokering style to suit yours. Any that don’t meet this criterion can instantly be struck from your list.

Step Two: Assess the Level of Support You’ll Require

There are three types of brokering service available: execution-only, advisory, and discretionary. These various options will suit different investors to varying degrees, so it’s important to assess which will be best for you. Although execution-only options tend to be the most economical, they offer no support, which renders them largely unsuited to those who are short on time or inexperienced. Advisory services leave the last word in your hands, but offer far more practical and emotional support for traders, making them an ideal option for those who want to learn on the go. However, for those with a big budget whose sole concern is the success of their endeavour, a discretionary service might be even better.

Step Three: Consider the Costs

Once you have a shortlist of suitable brokers offering the service and pairings that you need, it’s important to consider your costs. Most traders won’t have an infinite budget to fall back on, so it’s imperative to choose someone that you can easily afford: after all, the aim of the game is to make a profit. The more professional advice and support you receive, the higher your chances of success so, as a rule, the best way to make a decision is to identify the most comprehensive service that you can afford.    

Choose wisely, and forex success is a distinct possibility.

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