The cryptocurrency space can be extremely volatile, so much so it may be a wise decision for some traders to limit exposure to it and instead take advantage of opportunities in the foreign exchange market, which trades an average of $6.6 trillion of value a day.
While most reading this are likely familiar with cryptocurrency exchanges, finding the right forex trading platform may be a challenge as there are a lot of options out there and some aren’t as good as others.
Choosing the right forex platform will ultimately require a rather large amount of research, although there are several things to check to immediately know whether a platform is good or bad. There are also forex platform reviewers out there that will list the pros and cons of top platforms and sift through scams for you. Nevertheless, let’s look into some of the few things you need to check before choosing a forex trading platform.
1. Regulatory Compliance
In the cryptocurrency space, it’s common for top exchanges to require know-your-customer (KYC) and anti.money laundering (AML) checks, and the same is true for forex brokers. If you find a platform that does not require them, that’s a red flag.
To ensure you’re dealing with a reputable broker make sure it’s registered with local regulators. In the United States, this would mean being registered with the U.S. Commodity Futures Trading Commission as a Futures Commission Merchants and Retail Foreign Exchange Dealer.
In the country, reputable forex brokers are also members of the National Futures Association (NFA), a self-regulatory organization that develops rules, programs, and services to protect the integrity of the market and of traders.
Be aware that a professional-looking website and a ton of reviews don’t exactly mean a platform abides by local regulations. As you will be depositing your funds on the platform this is an essential step – platforms that aren’t regulated may be doing something that will ultimately see them get taken down.
Commissions and spread are going to heavily influence any traders’ profits, and many forex broker advertising they charge no commissions which to some could be somewhat misleading, as these platforms make their money charging wider spreads.
A spreads if often fixed at a certain amount of pips, with a pip being the minimum unit of a price change in the forex market. This means that if the spread is of, let’s say 5 pips, a traders’ position starts slightly behind. If a EUR/USD pair is trading at 1.1195, then if the trader opens a long position he could only immediately sell it for 1.1190.
This means that the wider the spread, the harder it is for traders to make a profit. Often, major currency pairs that include the euro, the U.S. dollar, the Japanese yen, and the Great British Pound have low spreads, while crypto pairs and less liquid pairs have higher spreads.
3. Deposit and Withdrawal Flexibility
Each forex trading platform has a different deposit and withdrawal policy. The best ones will allow for greater deposit and withdrawal flexibility by diving users a wide range of options to deposit funds from – not just wire transfers, for example – and allow for small initial deposits.
When it comes to withdrawals the fewer hurdles the better. Most brokers charge a fee for withdrawals, but these also vary so they are worth considering when choosing a forex trading platform.
4. Customer Support Service
Finally, it’s important to understand how good a forex trading platform’s customer support service is. Sometimes things don’t go as planned and for that, it’s very important to have a human being on the other end helping sort things out – whether a deposit hasn’t arrived or a withdrawal isn’t being processed, there’s money on the line.
When choosing a broker, it’s a good idea to send over an email to their customer support team with any questions you may have regarding the company’s deposit and withdrawal policies, its commissions, or even for more details on the company.
Choosing the Best Trading Platform
After checking these four marks for a forex broker, it’s time to get familiar with their trading platform. If a broker passed every test so far, chances are their software is easy to use, visually pleasing, and is packed with tools you can use to make the best trading decisions.
Consider using forex trading platform review services to guide you in your search for a good broker. FXForex stands out as it has been online since 2010 and its goal is to give its users the best possible guidance on currency and CFD trading online.
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