There are a certain number of characteristics, some essential, some a matter of choice that you should consider in choosing a forex broker.
In the US, a reputable forex broker will be a member of the National Futures Association and will be registered with the U. S. Commodity Futures Trading Commission as a Futures Commission Merchant and Retail Foreign Exchange Dealer.
A broker that is a member of the National Futures Association and subject to CFTC regulations will state this and its NFA member number on its website, typically in the "about us" section and on each web page.
In the UK, brokers are regulated by the Financial Services Authority. In other countries, there is a specific regulator responsible for forex brokers. Any platform should have a legal indication of being regulated by such an authority, in the interest of protecting your deposit.
The offer of each broker may differ in terms of leverage and margin.
Forex brokers will offer a variety of leverage amounts depending on the broker, such as 50:1 or 200:1. The ability to select the leverage a trader desires enable better control of risk.
Different brokers may also offer different commissions and spreads.
A broker that uses commissions may charge a specified percentage of the spread, the difference between the bid and ask price of the forex pair.
However, most brokers advertise that they charge no commissions, and instead make their money with wider spreads. The wider the spread, then, the more difficult it can be to make a profit.
Popular trading pairs, such as the EUR/USD and GBP/USD will typically have tighter spreads than the more thinly-traded pairs. A trader should compare spreads on the pairs the trader prefers to trade from broker to broker.
Different brokers also offer different terms for deposits and withdrawals.
Each forex broker has specific account withdrawal and funding policies. Brokers may allow account holders to fund accounts online with a credit card, via ACH payment or via PayPal, or with a wire transfer, bank check or business or personal check. Withdrawals can typically be made by check or by wire transfer. The broker may charge a fee for either service.
The offer of currency pairs can also vary from broker to broker. Many brokers offer only the majors, and then a few minor pairs. There are, however, a great deal of less-traded pairs that merit attention, and it may be worth finding a broker who offers a great variety.
Ease of use of the trading platform is another important offer from a broker. The platform should be easy to use, visually pleasing, and have all the tools that the trader likes to use.
The trader should have no difficulty working with the platform so that there are no mistakes when trading.
One other factor that may affect your choice of a broker is customer service.
This can vary wildly from one broker to another. Trading forex is a 24-hour activity, so your broker should certainly offer full-time customer service. There should also be rapid intervention if you have a problem making a withdrawal of funds – one typical problem with forex platforms is that it can awkward trying to get your profits out.
Your platform should have a consistent withdrawal policy and, if something goes wrong, customer service should intervene without delay or any issues.
Similarly, if there is a trading problem – that is, if the trading software malfunctions – your customer service should unwind the trade for you without any questions.