7 questions to Ask to Find the Best Forex Trading Company for Beginners
When it comes to choosing the best trading company, for the uninitiated, this may seem like a difficult choice, with endless options. Here are the most important criteria to consider when choosing:
1. Is the forex trading company licensed?
It may surprise you to learn that the forex market does not have a central regulatory body. However, this does not mean that you should choose a broker without considering the issue of licensing. Instead, we recommend choosing a broker that is regulated by the financial licensing authority in your area and has additional licenses from abroad such as:
FCA – UK Financial Conduct Authority
CySEC – Cyprus Securities and Exchange Commission
ASIC – Australian Securities and Investments Commission
sec – US Securities and Exchange Commission.
Licensed brokers usually take pride in this and use it as their competitive advantage with the rest of the trading companies.
The benefit of choosing a licensed and regulated broker is that this will ensure that you, as a trader, are protected to the fullest extent under the laws of your country. For example, in 2018, the European Securities and Markets Authority (ESMA) introduced a set of legislation protecting novice trading clients, which all European forex brokers must comply with. This legislation includes limits on available leverage, volatility protection, negative balance protection, and more.
It is also important to consider the security of your money. With this in mind, we recommend choosing a trading company that separates their clients’ money from theirs, ensuring that the broker does not use your deposits for any of their own financial activities.
It also ensures that your funds will be available for withdrawal based on your request. Finally, check if the broker offers a compensation service for financial services. This service determines the amount of money that will be compensated to you if your broker or his bank goes bankrupt.
2. What is the quality of services provided by the forex broker?
The services of the forex trading company you choose and the trading platform are fundamental to ensuring the best trading results. If you were trading on a platform that was slow and crashes regularly, for example, you may not be able to enter or exit a trade at the price you want.
Instead, it is important to look for a broker that offers high levels of liquidity, low spreads, the ability to execute orders at the price you want (or as close as possible), and advanced trading platforms that are easy to use.
Another important component of the quality of service provided is the margin requirements and the level of leverage available. Although there is no need to choose the highest level of leverage available when starting forex trading, just knowing that the broker offers the highest level of leverage approved by the regulators means that as your experience grows, you can start increasing the leverage according to your requirements and preferences.