There are many great forex brokers in the market, but choosing the best of them is the hard thing to do. In South Africa, there are also many big brokers but not all are suitable for traders. So how do you compare the brokers and choose the top forex brokers in South Africa when you join in this market? This article will be reviewing some standards that can be applied very well.
COMPARING
My team has been trading for years with all kinds of forex brokers from the biggest ones to the smallest. Finally, we have concluded some common standards for us to see when we want to compare 2 brokers together. These are also applied for the brokers in South Africa, which are:
- Regulations of the governmental regulators
- Trading conditions offered to traders
- Account types. Open Exness accounts
Checking regulation
What is regulation? It is the license that are given to brokers by the governmental regulators to manage them and create the safe trading environment for traders. All funds of traders are protected, too. Often, the brokers with more trusted licenses such as FCA, FSCA, CySEC & ASIC are also more reliable and trusted
Checking reputation
When we talk about the reputation, we consider these 3 things: regulation, trade execution method, and client fund management.
First, regulated brokers should be chosen, especially the ones that are managed by governmental regulatory agencies. They gain more trust and integrity from those agencies, which is safe for traders.
Next, trade execution method should be considered thoroughly by how it works. We also have to see if the execution involves the dealing desk or there is any conflict of interest between brokers and traders. If any bad things like a broker receives financial incentive when trader loses trades happen, it could indicate that the broker is less trusted and should not be chosen.
Finally, we have to see if the broker has segregated our funds into many accounts at major banks in local jurisdiction or not because it could avoid the risk from bankruptcy of brokers.
Checking trading conditions
Spread is the difference between the Bid and Ask price or between the buy and sell price. It is measured in pip. If spread is low, it could be said that it is tight. On the contrary, it is said to be wide when the spread is high. For example, 12 pips is wide and 0.1 pips is tight. Of course, traders prefer the tightest spread since they will have low cost of transactions. Different brokers have their own spreads.
Leverage is used to amplify the size of trades. If there was not leverage, it would be impossible for individual retail traders to do business. For example, a leverage is 800:1, which means that trader can increase his trade size by up to 800 times, which is very high and beneficial for traders. The leverage is various among the brokers, however, it depends on the traders’ experience.
Checking account types
According to the trend in the industry, there are 3 major account types: live/ real account, demo account and swap-free account. Although there used to be more types of account in the market, traders often follow the trend to trade. There is managed account but it is not common.
Real account:
Because it is in real market, it has real things such as trading conditions, cost of transactions, price and money,… Your balance will be fluctuated when you execute a transaction.
Demo account:
This is for those traders, especially for beginners to practice and learn more about forex market. They can also try the customer service, trading conditions, research area,…of a broker.
In brief, it is recommended to use these standards above to choose the best forex brokers in South Africa.
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