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Most of these brokers offer free demo accounts so you can test the brokers and their platforms with virtual money. Give it a try with some play money before using your own cash.
Not all Forex brokers accept US clients. For your convenience we specified those that accept US Forex traders as clients.
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First and foremost, you want to use a broker who is regulated in your country. An unregulated broker does not account to anybody, so you can never know whether your money is safe or he will take it and disappear one day without notice. Int his case an FMA regulated broker should be your choice.
Secondly, a trading platform is something you want to check with your broker. It is your tool to trade, so if it is too complicated or non user friendly we would suggest finding another one.
Commission and spreads come next. You want to find broker with the lowest spreads and no hidden fees.
A good broker will offer you at least a few types of accounts to choose from. Whether you come with 50$ or with 50000$ service provider should offer a type that suits your interests and possibilities best.
Customer care and service is another thing you should look into when you are in search of a broker. Brokers that do not respond to their customer requests in a timely manner should be avoided altogether.
As Forex is a vast global market it will have different legal authorities regulating it in a specific country or even region. US and Europe are two good examples. FX brokers in US are regulated by NFA and CFTC. Those are very strict regulators and they will take severe legal actions against brokers who are not registered under them. Current capital requirement for US brokers is 20 million $ and a lot of small companies cannot afford them, so the number of players in FX market is not that big. Leverage that is allowed would be between 50:1 to 20:1 depending on currency pairs traded.
In Europe, on the other hand, requirements for FX companies are more loose and the leverage can be 200:1. In Europe Forex trading was harmonised so a broker that has a licence in one member state can legally function in any other one. Each European country will have its local regulator, some like in UK (FCA) more strict ones and some like in Cyprus (CYSEC) more loose ones.
Forex brokers in New Zealand are regulated by FMA (Financial Markets Authority). It is quite a strict regulator that was given regulation powers in 2011 after the Securities Commission of New Zealand was dismissed as an incompetent regulator that failed to curb fraud, price manipulation, excessive risk trading by local market operators and inside trading that ultimately led to huge losses for individual investors. More strict rules and regulations apply now for those who offer financial services in the country. Lots of brokers lost their licenses and new ones coming to offer their services have to comply with new rules, open their books for regular audits and share whatever requested information is needed. So, trading with FMA regulated broker is pretty safe now.
It is only natural to expect that a good broker will offer you to test their trading platform on a demo version before you start trading on a real money account. Their platform should be user friendly and easy to use, but also offer you a lot of other features and options that you might need for analysis and application of your specific trading strategies: various charts with indicators, the ability to draw and write notes, a large variety of time frames, the possibility of opening multiple windows and be able to study them separately, incorporated news feed, strategy tester, the possibility to copy other traders and etc.
Most brokers will offer you a downloadable software for Metatrader (MT 4) platform that you can launch right from your desktop and trade after logging in or they will offer you an online platform, which does not have to be downloaded, but can be used straight from your browser. Social trading platforms are also a good choice, because you will be able to use social investing platform by copying traders that are successful and make profits. Lastly, this is the age of mobile phones, so a good broker will probably have a mobile application and you will be able to trade currencies on the go on your mobile phone.
Most Forex brokers are compensated by spreads, which is the difference between the bid and ask price. Some companies use fixed, some variable spreads. As an example, a broker that has a fixed spread would probably offer 1-3 pips for the most popular Forex pair eur/usd. For a variable spread this range can be smaller. Under normal market conditions, where no news is expected or released the spread for the pair can be 0.2-0.5 pip. However, when news comes variable spread can increase to 10-30 pips for the pair and much more for less popular currency pairs such as gbp/jpy or eur/cad.
Depending on your capital size most brokers will offer you a number of choices for an account. The most popular structure is micro (with micro lot size 1000$), mini (with mini lot size 10000$) and standard (with standard lot size 100k $). So, if you have only 100 $ you may apply for a micro account and start trading having gone through verification process. The same is true with other account types. Other brokers may even offer you up to 9 types of accounts. So, be sure to check them when you visit your brokers website and choose the one that fits your needs best.
Good customer service is a feature of a reliable broker. Most good New Zealand brokers will definitely have a customer service line where you can ask a question, have a query, send a complaint and get an answer 24/7. More serious complaints should also be solved by a customer care department between 24-72 hours. If you ask a question and wait for a week for a response from your broker, do not even think about opening an account with them. Trading involves a lot of risk and you need a broker whom you can trust and who deals with your problems responsibly.
Extra services that you would expect a broker to offer would be education and those should be free of charge. They should offer you materials explaining basics of currency trading, fundamental and technical analysis, Central Banks policy, interest rates, risks, trends and etc. You would also expect webinars on various educational topics ranging from beginner to advanced traders. Look through a brokers website to find out what they offer to see for yourself.
As you may see the choice of a good broker relies on a number of factors explained in the article. We have created a list based on all of these factors showing the most recommended brokers. If you trust your broker you will be able to concentrate on your trading and trade with a peace of mind without worrying whether your broker will implement some manipulative scheme against you or not. Confidence and trust will help you to make more rational decisions that will ultimately contribute to you becoming a more successful trader.
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