Forex trading is very popular in South Africa, and South Africa is one of the most important markets for Forex brokers. This is good for south African traders since they have many different brokers to choose from. Almost all large Forex brokers are present in the South African market. Traders can find a broker that suits their trading needs and give them access to all the features they want access to.
In this article, I will discuss the things you should consider before opening an account with a Forex broker. Choosing the right broker will make trading more accessible and will maximize your chances of earning money while trading.
Consider these factors when Choosing the Right Forex broker
Regulator
Traders based in South Africa should ideally choose a broker regulated by the South African Financial Sector Conduct Authority (FSCA). FSCA will provide the best protection for South African traders since it is easier to complain to a regulatory body inside your own country than it is to complain to a regulatory body outside your own country. There are a large number of FSCA-regulated Forex brokers to choose from.
If you do not find an FSCA-regulated broker that provides the feature you want, then you can choose a broker registered by another well-regarded regulator such as FCA or CySEC. They both offer good trader protection.
Reputation
You should always choose a broker that has a good reputation among traders online. Visit forums and websites to see what people say about the broker. Look for a broker with primarily positive reviews. No broker will have a 100% positive reputation online. There will always be disgruntled traders. Do not be scared if a broker has some bad reviews as long as the majority is positive.
Low fees
You should always look for a low-fee broker with a small spread. Fees make it harder to make money from your trading. Always consider all fees when comparing brokers. Some brokers charge a commission but no spread, while others offer commission-free trading but a high spread. Your goal should be to find the broker that is cheapest to use for the trading strategies you want to implement.
Demo Accounts
Always choose a broker that features a free demo account. A demo account allows you to trade for free using virtual money. Demo accounts are sometimes referred to as virtual trading accounts. Demo accounts are a crucial tool to have access to while you learn how to trade successfully.
Almost all traders will lose money when they first start trading. You can avoid losing real money by initially trading in a demo account. You can keep trading in the demo account until you become skilled enough to make money trading online. Demo accounts are also very good if you want to try out new trading strategies to see if they work before deploying them in your real money account.
Trading platform
You should always choose a broker that features a trading platform that you feel is easy to use and offers you all the features you want. If you want to use a specific software such as MetaTrader 4, MetaTrader 5 or Ninjatrader, then you need to choose a broker that works with the software you want to use.
Mobile trading
Do you want to trade on the go? If so, you should choose a broker that features mobile trading and a well-designed mobile trading app. There are plenty of Forex brokers that feature good iOS and Android apps. The software that you can use on your computer will always be better than mobile trading software, and it is expected that there are features that are only available while trading on your computer.
Type of broker
There are several types of brokers, such as dealer desk brokers and non-dealer desk brokers. Dealer desk brokers have their own dealer desks and perform a lot of trading in-house. None dealer desk brokers do not have a dealer desk. They send your order out on the open market. Dealer desk brokers will assume the opposite position to you in each transaction.
There will be no third party involved in the transaction. The Forex broker will make money when you lose and lose money when you earn. This is a conflict of interest, and I, therefore, recommend that you choose a none dealer-desk broker.
They only earn money from the trading fee, and there is no conflict of interest. A none dealer-desk broker such as an ECN or STP broker will earn more money if you earn more money and keep trading. Their interest aligns with yours. I, therefore, recommend that you use an ECN, STP or other none dealer-desk Forex broker.
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