Regulation and low fees are two of the top-most considerations when traders choose a Forex broker. For one, investors are heavily profit-driven, often opting for service providers that offer the lowest charges possible, while making sure that their funds are safe and secure at all times.
In this article, we will go through some of the topics that can help a trader make better investing decisions in the Forex market.
This includes the benefits of using regulated brokers, a checklist for selecting the right brokerage platform, and a list of brokers charging the cheapest fees in the currency market today.
Benefits of engaging with regulated brokers
Regulation is oftentimes neglected by traders who are blinded by high-paying platforms. As a general rule in trading, anything that entices users with easy money often turns out as a scam.
With the proliferation of brokers, regulation is paramount and should be a top priority when selecting a broker. Regulatory bodies in the Forex industry, such as the United Kingdom’s Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), and the Australian Securities and Investment Commission (ASIC) put priority on protecting traders’ assets.
This is done by setting a number of guidelines that brokers should comply with before they can offer their services legally. This ensures transparency and fair trading for both parties and in turn motivates traders to invest more on the platform.
In unfortunate events such as bankruptcy or force majeure, a regulated broker is mandated to return client funds, a neglected feature often missing in unregulated service providers.
Checklist in selecting brokerage platforms
There are thousands of brokers competing to get a share of the trillion-dollar Forex market nowadays.
On the other hand, not all are cut the same way, with companies that made it to the top 100 Forex brokers list having shown exemplary performances in terms of regulation, trading conditions, fee structures, tools offered, and availability of educational materials.
As mentioned, regulation is placed high up when selecting a Forex broker. There is a never-ending list of fraudulent service providers in the market today, and the best way to bring down the risk is to engage only with regulated brokers.
Another important consideration is trading conditions. Expert advice is to go for brokers that provide fair rules for traders and avoid ones that ought to take more than they are willing to give.
Going for a broker with the lowest fee is non-negotiable. Forex trading offers an immense opportunity to profit, but it is also ruled by high fees and hidden commissions. Always go for ones that provide the best fee structure that maximizes one’s profitability.
The availability of trading tools is also one to look out for as this will give one the flexibility to execute trading strategies without restrictions. Does the broker support MetaTrader4 or MetaTrader5? Does it offer free demo accounts? These are just some of the tools to look out for.
Lastly, the availability of educational materials is a neglected consideration, especially for new traders. Educational materials help traders adjust faster in the fast-paced nature of the Forex market.
Traders Union Overall Score
Traders Union, the first official international association of Forex traders worldwide, has devised its own yardstick for evaluating the reliability of Forex platforms called the ‘TU Overall Score.’
The scoring methodology adheres to a straightforward principle, where brokers receive a score within the range of 0.01 to 10.0 and a higher score corresponds to a greater degree of trustworthiness.
In detail, brokers achieving scores between 8.0 and 10.0 are deemed the most dependable platforms within the Forex market. Traders Union experts recommend traders create and fund their accounts on these platforms.
Brokers falling within the 7.0 to 7.99 score range are considered quite reliable and deserving of trust. Traders Union experts have observed that these platforms are positioned just one level below those highly trusted.
For brokers scoring between 5.0 and 6.99, they represent mid-level companies and are generally regarded as reliable. TU recommends thorough scrutiny before initiating account openings with these brokers.
Brokers scoring between 3.0 and 4.99 come with a notable level of risk and a comprehensive analysis is advised before considering the opening of an account with these brokers.
Finally, brokers scoring 2.99 and below do not fare favorably when compared to their higher-ranked counterparts. Traders Union expressly discourages trading on these platforms.
Cheapest Forex brokers in the market
Aside from regulation, finding the cheapest Forex broker should not be neglected as this plays a key role in achieving one’s profitability.
Trading platforms charge a number of fees, including Forex spreads, trading fees, commissions, inactivity charges, conversion fees, withdrawal deductions, and account maintenance costs, among others.
In 2023, eight regulated Forex brokers stood out in terms of fee structures and low commissions. First on the list is Exness, with a minimum deposit of $1 and a leverage starting at 1:30. RoboForex placed second with its attractive $10 deposit requirement and a 1:30 starting leverage.
IC Markets made it to third place despite its relatively higher minimum deposit of $200. The platform is known for its fee structure transparency and straightforward commission. The same goes with Pepperstone which ranked next to IC Markets and offers a $200 deposit requirement.
Other Forex brokers that made the 2023 list are FP Markets, Interactive Brokers, Admiral Markers, and Tickmill, with all having minimum deposits capped at $100 and are listed among the most popular service providers in the Forex industry with their impressive number of clientele.
Author Bio: Jeremy Flint