Finding the best forex platforms for new traders

For beginner Forex traders, deciding which broker to sign up with can be a daunting task. There are hundreds of Forex brokers on the market today, each promising  to offer the perfect trading conditions.

However, to ensure that your money is secure and that you are given the best possible advantage over the Forex markets, there are certain factors that you should consider when selecting a Forex broker for the first time.

Here are the most important aspects to consider when choosing a Forex broker for beginner traders.

1. Regulation is key

Without a question, the two most crucial factors in selecting a broker are their level of regulation and compliance. When it comes to client funds, an unregulated broker can do whatever it wants.

You should treat any broker that is not regulated with extreme caution, as they could be perpetrating an internet fraud.

A reliable broker’s actions should always be overseen by a government agency whose mission is to ensure the legitimacy of the brokerage industry, such as IFX Brokers which is regulated by the Financial Sector Conduct Authority (FSCA) in South Africa.

Brokers who operate under government oversight are subject to laws and regulations designed to protect their clients’ money. That’s why rules and laws are so crucial.

A “Net Capital Rule” requires all registered brokers to maintain a certain level of readily available funds. In this approach, investors have a “safety net” in case a broker goes out of business.

2. Consider the type of broker

A trader’s overall success in the market may be affected by the broker they choose to work with. Like the dealing desks offered by banks and other financial organisations, dealing desk brokers perform a similar function.

In contrast, traders with an ECN broker like IFX Brokers have instantaneous connections to all other market players via an electronic communications network. In what ways do the tighter spreads offered by an ECN broker make it preferable to a Dealing Desk broker?

For one thing, ECN Brokers are able to provide significantly superior bid/ask spreads because they handle price quotations from multiple liquidity sources.

An ECN broker’s business model is completely fair since it avoids a key conflict of interest: by matching trades between different traders, it prevents itself from becoming the sole market-maker and therefore from trading against its own clients.

3. Always check the fees

The services provided by a broker, which are primarily geared towards expediting transactions between buyers and sellers, are compensated for by the brokerage fees that are charged to both parties.

The cost of these commissions varies widely from broker to broker and from service to service. Retail traders can better understand the situation if they consider the difference between the spreads charged by Dealing Desk Brokers and the spreads and commissions charged by ECN Brokers.

An important distinction between fees and commissions for all traders to be aware of is that fees are a fixed payment regardless of the size or kind of the delivered financial instrument or transaction.