Foreign exchange trading is risky and therefore not suitable for beginners. If you are aware of the high risk, you should consider the following tips when choosing a forex broker.
Forex trading: tips
First tip: Narrow spreads
Choose a forex broker that provides narrow spreads for the requested currencies. In foreign exchange trading there are no fixed commissions per trade – unlike in stock trading. The broker's profit results from the spread, i.e. the difference between the bid and asked prices of the currency. Even if the spread differences between the brokers are relatively small, you can save a lot of money choosing the right broker if you trade frequently.
Second tip: Forex tools and services
Choose a forex broker that provides the requested tools and services, for instance mobile trading apps, analytics tools, real time data and specific currencies.
Third tip: Reputation of the FX broker
A multitude of foreign exchange brokers can be found on the Internet – not all of them are respectable. For a selection of FINMA regulated providers, just go to the online trading comparison tool and select "Forex" within the filter criteria "Specialized asset classes".
Fourth tip: Leverage and margin
Select an FX broker that will provide you with the requested leverage and margin. The higher the leverage, the higher the risk. Choose a forex account that allows the minimum amounts you would like to trade with.
Fifth tip: Demo trading account
Test the FX broker before you trade with real money. Most Swiss forex brokers offer a free demo trading account.