When trading forex with forex brokers South Africa, you will have a lot to learn and the forex broker that you choose is actually the largest trade that you will be able to make.
You will be giving all your capital for trading to the company expecting that you will be in a position to trade with it and at the same time withdraw it when you want to take your profits from the trade.
You might have great strategies for forex but if you end up with a forex broker who runs with your money after you work hard, your hard work and research will go to nothing. You need to ensure that you follow the below tips to find a great forex broker so that you will have the right one who will meet your needs without having to expose you to scams.
Consider the needs you have
Before you look around for brokers, you need to know the needs that you have. The following are some of the things that you have to consider:
- Are you going to do a lot of trading or just a little?
- Are you going to make small moves or are you going to embrace bigger moves?
If you are going to do a lot of trade and capture moves which are small, you need to consider forex brokers South Africa ECN broker. You will be required to pay a certain commission on your trades but the spread will be very tight, which is very important when you are trading with small moves. Check out the various ECN forex brokers and settle for the best.
If you feel that you will require an ECN broker, they are readily available. But in case you will be doing scalp trading, you will require an ECN broker. What is the amount of capital that you will be having? When you have a small amount of capital, you will end up having to trade on the micro-lots. If the capital you have is over 50000$, you are free to start day trading on mini lots. You don’t have to open a standard lot account unless you are having 50000$ and above.
There is a need to choose an account and a broker type of the lot size which matches with your capital. When it comes to having to deposit and withdraw funds from the account, various brokers will give out different methods. You have to choose a broker who happens to align with your type of needs.
What the broker should be offering
Now that you already know what you need in your trading, and you have hopefully been able to narrow down the list of the potential brokers, there is a need to look for the following in your potential broker:
- No desk for dealing. If you happen to be a day trader, you will want to interact direct with the market and not to send the order via a trading desk which will be the one to initiate it for you in the market. It is something that take a lot of time and results in re-quotes. It is when the price has changed because you placed the order, and the broker asks you if you want to proceed. Due to the time delay, your opportunity for trading might be gone
- Ensure that the broker you get is one that is regulated by the country with a financial system that is well established. A forex broker regulated by the South African authority is better for example, than one which is not regulated at all, but you will still encounter some problems. You need to pick a broker which is regulated by the G10 countries such as the UK, USA, Canada, New Zealand, Japanese or the Australian authorities.
- As a day trader you would want to get spreads which are competitive. An example being a day trading in the USD/ZAR during a major session or the USD/EUR, you expect the spread to be close to the one point in percentage – pip with an account which is non-ECN. With two pips which are very high, it is able to eliminate the need to have a broker. Having an ECN account, the spread will be able to be half the pip or less when there is a major session.
- Get a broker who is readily available whenever you need them. Try to open a demo account first with the brokers and then sent several emails with a lot of questions. Get to monitor how fast and thorough that they respond. In case the customer service is not good, you can end up eliminating the broker from the list of the potentials.
Check out the reviews and be wary of the losing trader ones
During the research for choosing a broker, you need to look at the reviews which are written of the broker as well as the discussions being carried out in the forums about the broker. You should be careful when doing this. Unless it is a credible source which is providing the information, and with most forums not being credible enough, you might come across some fake reviews both negative and positive.
Majority of the day traders tend to lose money and because of that, the traders will not admit that, they will start blaming others for their loss whenever it happens. Just because a trader complains about losing money doesn’t mean that their broker is bad, even though the writer might end up blaming the broker.
You need to look up regarding what others are saying while at the same time maintaining your objectivity. There is a lot of false information which gets published with no credible reference to it.
Test out the broker personally
With a list of small potential brokers, you should try to test them on your own to find out if what is being said about them is true or false.