The first step is to do in depth research. Before you shortlist the brokers, you need to know what you really are looking for in a broker and then compare them on the different parameters.
Some of the points you need to address are:
1. The brokers shortlisted should be registered with the regulating authorities. For a United Kingdom based broker, they should be registered with the Financial Service Authority.
2. Check whether the broker offers fixed and/ or non-fixed spreads. If you are planning on making quick profits then the brokers should have wide spreads. Depending on the model they follow brokers are mainly market makers or true brokers. The market maker broker will usually be on the other side if needed but this model is now not so common because of the regulatory controls. The true brokers will not provide any mark up as compensation for the broker in the spread. The spreads here are lighter, but the transaction cost might be higher.
3. Find out whether the broker is well capitalized or not. If the broker has issues with the capital then it can be risky for you. You can verify the capitalization of the broker at the regulatory body website.
4. Find the leverage that the broker can provide.
5. Know the account type. Brokers provide different types of accounts depending on your need such as – micro, mini, standard and the demo accounts. The parameter for differentiation is the trading size but this ‘size’ might vary for each broker. Hence check with the broker the minimum capital required for each trading account. Understand the minimum capital to start trading. Also know the spread against each account type.
6. Know whether the broker credits and/or debits daily rollover interest. This is of particular importance if you plan on holding positions overnight.
7. Find if the broker offers other key services such as news feeds, market analysis, charting etc.
8. There are hundreds of Forex trading platforms to choose from. Some of the most prominent are MetaTrader 4 and ACT Forex. Some traders have their own custom platforms such as Deal Book 360. See the demo and then make your choice.
Make sure you check out the best forex broker of 2017.
Once you have the broker’s shortlist, and then apply for demo accounts. This is a very important phase. Ideally you should open 2 to 3 demo accounts on different platforms such as MT4 Broker or mt5 broker etc. Understand the different features available on the trading platforms. Know how they work in different environments. Verify first hand their customer service, their ability to respond to your queries.
Remember that the demo platforms are very much similar to the live ones but they do have some differences. These could be the speed, reliability, task slippages and so on. Once you are comfortable with the demo platforms opt in for the live platform whichever it is. It is always advisable to take small steps, do not invest heavily, and check the broker and the suitability for your particular Forex trading needs.