Are you still new to forex? Interested? But Don’t know where to start? If yes, most traders are advised to start learning a demo account. But the thing is, demo account at which broker?
There are lots of forex brokers scattered today. Almost all of them offer free demo accounts. Maybe there is no need where you should open a demo account because again, trading on a virtual account is free of charge and has zero risk. But wouldn’t it be better to open a demo account at a beginner-friendly broker as well?
This step will make it easier for you to learn forex trading, as well as pave the way for the beginning when you are ready to trade on a real account. So, what should you pay attention to in finding the most suitable broker if you are a newcomer? In addition to the mandatory requirements such as a free demo account, regulation, and good customer service, here are things you can pay attention to when choosing the best forex broker for beginners:
Trading Fee
All brokers will expect a trader to make a minimum deposit when opening an account and will then fill the spread on each trade. Another common fee is the swap fee paid for holding overnight trading positions. Some brokers will also charge commissions or other types of fees. A good understanding of these fees is important for novice traders as some brokers charge higher fees than others.
Minimum Deposit
The first cost that novice traders will face is the minimum deposit requirement. While it cannot be classed as an expense – as it is the capital or funds you will be trading with – it is an important expense for beginners to consider. Some brokers have relatively high minimum deposit requirements, often 1000 USD or more, which can put their trading accounts out of reach for beginners. In general, the higher the minimum deposit on the account, the better the trading conditions available on the account. Brokers like Oanda will sometimes offer free access to advanced trading tools, personal training sessions, VPS services, or personalized customer support with a higher minimum deposit. Also, read the oanda review to find out details about this Broker.
Spreads
Spread is the most common Fee Brokers Charge. This is the difference between the buy and sell price of the trading asset and is measured in pips (5th decimal place of the asset price). The broker will artificially widen the spread from the market price of the original asset. This means that when you buy or sell an asset at the spread, you are buying it below or above the actual market price – because it requires a greater fluctuation in the market to make a profit.
Some brokers will offer fixed spreads, which means the difference between the buy and sell prices of the asset never changes. Other brokers will offer floating or variable spreads, meaning that the spread will be wider or tighter depending on demand and volatility. Many beginners prefer to trade with fixed spreads as this makes trading costs easier to calculate.
Swap Fee
Another common fee is the swap fee. Forex trading is leveraged trading, this means that traders borrow money from their brokers to artificially enlarge their trading positions. As in life, borrowing money requires you to pay interest on the loan. When a trading position is held overnight, the leverage borrowed from the broker is also held overnight and will incur interest charges – this is called swap fees. The swap fee will depend on the asset being traded, the amount of leverage used, and the size of the trade itself.
Commission
Some brokers will also charge you a commission. Commissions are generally charged by a DMA (direct market access) broker. Direct market access brokers generally do not artificially widen spreads (or widen only slightly) and will instead charge a fixed commission as a fee for providing direct market access services. Direct market access brokers generally do not target novice traders and often have higher minimum deposit requirements.
The broker will also charge other fees, although these are not directly involved in trading fees. Deposit, withdrawal, VPS hosting fees, and inactivity fees are usually charged by the Broker. Most Islamic trading accounts (swap-free accounts) will also have an additional fee to cover the cost of removing the overnight interest charge.
Customer Support
Beginners need good customer support from their brokers. This is one of those things you wish you never needed, but when you do need it, it has to be easily available, fast, and genuinely useful. The best customer support will be available 24 hours a day (Monday-Sunday) via live chat, phone, messaging, and email services. It is also important for the broker to have great IT support, as the process of setting up a trading platform can be complicated for new traders. Many new traders can’t find time during the workweek to get started, so the customer support available on the weekends would be very helpful, but unfortunately, this isn’t usually available.
Customer support must also be multi-lingual. In addition to English, some of the operating brokers have customer support in other languages from local offices. It’s helpful to have a customer support agent who speaks your language and understands that the needs of local beginners are not the same as those of novice forex traders in Europe or Australia. The best beginner Forex brokers understand this and set up their customer support desks to accommodate their clients’ needs.
Forex Learning Guide
This feature can take various forms and can be a useful facility in addition to demonstrating the broker’s commitment to providing the best service for novice traders. Forex learning guides from brokers don’t always have to be in the form of forex schools, online courses, or personal tutoring. Although several brokers offer it, the forms of trading education that are more widely offered are usually webinars, forex seminars, as well as ebooks, and exclusive trading video tutorials.