The foreign exchange (forex in short) market accounts for more than $5 trillion, on average, in terms of value of trading on a daily basis. As such, it is the largest among all the financial markets in the world. Further, there is no central marketplace for the currency market. Therefore, traders have to work with a forex broker that offers a platform to conduct their trades.
Hundreds of forex trading platforms are available, but the most popular one among them is the MetaTrader platform developed by MetaQuotes. According to estimates, more than 85 percent of the retail forex trading deals are executed using this platform. It is true that this platform comes with several great features and is offered by many forex brokers, but all of them are not the same. Therefore, you need to choose the best and trusted one from hordes of MetaTrader forex brokers out there in the market.
How to Choose the Best and Trusted Metatrader Forex Brokers
Identify Regulated Brokers
The most important factor to be considered when identifying best and trusted MetaTrader forex brokers is regulation. If the MetaTrader broker you choose is not regulated, legal protection may not be available to you.
However, it is important to remember that some countries enforce a high degree of regulatory control, whereas some others enforce it to a lesser extent. Additionally, the regulatory requirements vary between countries. Therefore, it makes sense to choose a forex broker from a country where the authorities strictly monitor regulatory compliance. In addition, you must also make sure that the on-shore as well as off-shore operations of the broker are regulated. Countries where dedicated regulatory authorities are available are the USA, the UK, Australia, Japan, the Eurozone and Switzerland.
Look for Brokers That Are Well Capitalized
It pays to identify and work with a well-capitalized forex broker. This is because it ensures a lot of security for your funds. To understand the details about the capitalization status of a forex broker, you can visit the website of the regulatory authority of that country.
As the forex market is of OTC nature, brokers are required to make margin deposits either with a lender or a bank in order to obtain highly competitive pricing. Only MetaTrader forex brokers who are well-capitalized will be able to establish good credit relationships with liquidity providers and make available competitive pricing to their clients. In fact, the minimum level of capitalization that a fo rex broker must have to remain solvent is specified by regulatory authorities.
Different Types of MetaTrader Forex Brokers
Brokers operating in the OTC forex market are of different types. You need to choose the type of broker that suits you needs.
#1: Forex Brokers
Forex brokers act as a conduit between the dealers/market makers and you. They make available computer systems for processing your orders without manual intervention or using a dealing desk. These brokers are sometimes referred to by the name Non Dealing Desk brokers or Straight Through Processing (STP) brokers because of the Straight Through Processing technology they make use of.
In the case of forex brokers, the spreads they give you are dependent on the dealers/market makers through whom they route your transactions. These brokers offer fixed or dynamic spreads and charge a fee for the services provided by them. In turn, the market makers often provide some compensation if the broker routes transactions through their dealing desk.
#2: Market Makers/Dealers
The operation of a market maker is by means of a dealing desk. This is the method employed by most banks and financial institutions. Market makers follow a two-way pricing policy. They offer both fixed and dynamic spreads. In the case of dynamic spreads, the prices change in tandem with liquidity changes for some currency pairs. The market makers often interact with each other as making money depends to a great extent on their ability to manage the risk on their global forex positions.
#3: ECN Brokers
ECN brokers act as brokers to a number of market makers/dealing desks. Dealers send quotes to ECN brokers, indicating the volume required for the specified prices. In turn, ECN brokers distribute these prices to customers, but are not responsible for execution of orders. The spreads are determined by the difference between ask and bid prices. ECN brokers make money by charging a fee to customers and earning a commission from dealing desks.
Understand Account Features
Forex brokers often offer varied types of accounts, including standard, micro and mini accounts based on the number of lots traded. Typically, a standard lot has 100,000 units, while a mini lot has 10,000 units and a micro lot has 1,000 units. To help you establish your own lot size, some forex brokers provide fractional unit sizes. The mini/micro accounts help you to trade by investing a minimum amount of capital.
#1: Leverage and Margin
Brokers provide loan or allow leverage to customers who open margin accounts. Leverage ranges from 50:1 to 200:1. Some brokers offer more leverage. However, leverage helps to enhance profits received from winning positions. On the other hand, it contributes to widening losses in the case of non-winning positions. Leverage should be employed only with a great deal of caution.
#2: Ease of Deposit/Withdrawal
The deposit and withdrawal policies followed can vary from one broker to another. Therefore, you must choose MetaTrader forex brokers that offer several options for depositing funds into your trading account and allow you to withdraw money from your account without any hassles.
Check Out Brokers’ Customer Service
Forex trading takes place round the clock. Therefore, the broker that you are planning to work with must be accessible at all times. Another factor that you must take into consideration is the ease with which you are able to communicate with the representatives of the broker’s customer service department.
What has been explained above is not a complete list of factors to be considered when choosing MetaTrader forex brokers. Some of the other factors that you need to also consider include trading platform, order entry type, customization options available, automated trading options, etc., among others
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