3 STANDARDS TO CHOOSE THE BEST FOREX BROKERS IN SOUTH AFRICA

When getting started to a new market, every trader finds it difficult to choose the top 5 forex brokers in the world for their own. First, they have to compare brokers to each other, then, they have to choose the best. Below are some common standards to compare and choose the best forex brokers in South Africa for those traders who are about to join in this market.

COMPARISON

There are many ways to compare brokers to each other, but these are the 3 most criterias applied in South Africa market:

  • Regulations of the trusted governmental regulatory agencies
  • Trading conditions that are provided by forex brokers
  • Account types used in each other

1st standard: Regulation

Regulated brokers are managed by the governmental regulators to make the safe trading environment for traders and protection for their funds. In common, brokers sign up to have these trusted licenses such as FCA, FSCA, CySEC & ASIC. Brokers with more than one license from major regulators are considered to have more trust and integrity.

Reputation

Regulation, trade execution method, and client fund management are 3 most common things to consider when it comes to the reputation of a broker.

First, you should choose the regulated brokers which are managed by the governmental regulatory agencies. They will provided safe trading conditions and protection for all the funds. They will also have more trust and integrity from the major regulators.

Second, you should consider the trade execution by how it works. You have to see if a dealing desk is included in the execution or it has any conflict of interest between brokers and traders. If it happens, it is considered bad things of brokers and even more, if there is any financial incentive for brokers to have you lose your trades, those brokers are less trusted.

Finally, the top forex brokers in South Africa should separate all the funds into different accounts at major banks in local jurisdiction. Why so? Because it will reduce the risk from bankruptcy of brokers.

2st standard: Trading conditions

As you may know, spread is the difference between the Bid and Ask price or between the buy and sell price. Most traders prefer low cost, which means low spread. It also means that those two prices are close from each other and we can call “tight spread”. If they are far from each other, spread will be wide.

Leverage is an important part of forex system. It is used to increase the size of trades, which is very beneficial for traders. Why does it need to be the leverage? Because the market often has small movements, it would be very difficult for individual retail traders to go in this business. For example, a leverage is 500:1, which means that the size of trades can be increased up to 500 times of the original size. However, leverage is various among the brokers and based on the experience of the traders.

3rd standard: Account types

In common, brokers have offered many types of account in the market. However, due to the recent trend in this industry, we often use these types: live/ real account, demo account and swap-free account. Managed accounts are available but very rare.

Real account

As its name, real account has the real trading conditions, cost of transactions, price and money,… Traders will gain real profits and real risk when trading with this type.

Demo account

This is for beginners to learn about the forex and have more experience in the customer service, trading conditions, research area,…of a broker.

In conclusion, these standards above are used to compare among the brokers and after that, choose the best forex brokers in South Africa for traders.

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