With more and more people coming online, it is understandable that the number of forex brokers increased significantly compared to only a few years ago. But running a brokerage house is not easy, as challenges exist.
Therefore, any wannabe successful forex trader must first understand what the best Forex brokers in South Africa are doing before deciding which one to pick.
What Makes a Good Forex Broker?
Before deciding on a brokerage house, a trader should think about the goal of trading and how they plan to achieve it. Naturally, trading is done with profit in mind.
But how is that profit supposed to be made? How much is enough, and how much is too much?
For example, the trader might use automatic trading. In this case, the trader must look for a forex broker in South Africa that has tight spreads and fast execution. Otherwise, costs such as slippage (i.e., the broker filling orders at different levels than the ones required by the trader’s strategy) will affect the strategy and its overall profitability.
A good forex broker for any trader is one that is suitable for the trader’s needs. Only after that should one look at details regarding the brokerage house’s operations.
In this category, regulation is mandatory. An unregulated brokerage house poses a risk that the trader does not want to take.
Regulation comes with costs and rules for the brokerage house, as the financial authority aims to protect traders. In times of trouble, if the brokerage house cannot operate anymore, the financial authority steps in and takes care of customers by refunding them.
After all, a brokerage house is just a business, and not all businesses survive. But if this business is unregulated, the broker will be tempted to use the customers’ funds for other purposes. Therefore, by looking for a regulated broker, the trader makes sure that there is a financial authority behind the broker, and usually, the funds are safe with that broker.
It usually means the segregation of funds. Effectively, the broker puts the funds aside in different banks and accounts, segregating them from the operational activity.
A top forex broker in South Africa should strive to gain new customers and retain them. The retention rate is as important as the rate of attracting new customers, if not more critical.
It means that the broker should aim for successful traders who make a profit in the market. This way, the broker gains fees and charges commissions for its intermediation of trades, while the trader makes a profit.
Therefore, the broker should try its best to educate the trader, provide sound advice, and constantly improve both technology and the resources allocated to its customers. It is the only way to grow a forex business and succeed in the long run.
