The foreign exchange market is undisputedly the largest financial market in the world with more than $5 trillion in daily average trading value. This alone makes it hard for there to be a central marketplace for the FX market. Hence, traders must choose a trusted Forex broker to work with. Although Forex trading in Indonesia is still in its infancy, there is a large and growing number of FX brokers, which makes it difficult for traders to choose the right one. To avoid falling into the hands of fraudulent brokers, Indonesian Forex traders are expected to vigilantly sift through a vast number of brokers before finding a trusted one to trade with. To help you find a trusted Forex broker, we have compiled a list of key features to take into consideration when choosing one.
- Regulatory Compliance
Based source Analisaforex.com, The most important factor to consider when choosing a Forex broker in Indonesia is whether they are regulated by the local forex regulator – BAPPEBTI. BAPPEBTI was established in 2005 with the sole purpose of regulating Indonesian financial markets and overseeing financial intermediaries in the country. In 2013 the BAPPEBTI agency introduced stringent requirements for all financial service providers to curb the rising issues of scammers and illegal trading. Today, most of the fraudulent traders have been put out of business, meaning that the BAPPEBTI regulated brokers are much safer to trade with.
- Account Details
One way brokers attract different traders of varied incomes is by offering various kinds of accounts based on the size of capital they are willing to invest. These accounts include;
- Micro account: For this account, traders need a minimum lot size of 1k with the price of each pip being just 10 cents. Hence, they need to have no less than $100 to open this account.
- Mini Account: This account is for traders with under 5k. A trader can open this account and trade mini lots the size of 10k with each pip costing $1. To reduce your risk of trading, make sure you have at least $1000.
- Standard account: This account is for forex traders willing to trade standard lot sizes of 100k. While you can try this account with just 10k, the recommended amount is over 20k. Always keep in mind that the bigger the position of your trade, the bigger the risks are too.
- Islamic account: Majority of the Indonesian population is Muslim. Muslims in the country have the option to open a swap free Islamic account. For this account, traders are not required to pay or earn any interest on overnight lending rates.
Best Forex Brokers with Free Swap for Indonesian (Islamic Account)
- Commissions and Spreads
Forex brokers make their money through commissions in the form of spreads. A spread is simply the difference between the buying price and selling price offered by your broker. For instance, the main difference between these prices for the EUR/USD is usually between 1 to 3 pips depending on the broker you are using. Spreads can be fixed or variable. For most brokers, fixed spreads for major currency pairs are usually between 1 to 5 pips whereas crosses are between 6 to 20.
Under normal market conditions, however, variable spreads are usually lower. For the major currency pairs, the pip can be 0.1-1 and 1-6 for crosses. However, these spreads are quite volatile and are subject to change whenever something extraordinary happens in the market. For instance, when the FED announces the interest rate policy, or they change the overnight lending rates, the market immediately starts moving up and down rapidly. This may affect the variable spreads up to ten or even fifty times bigger for a few minutes before normalizing. So make sure to choose a best forex broker with the type of spreads that best fit your trading style.
- Trading Platform
Seeing as the Forex market is open 24 hours a day, five days a week, traders are not restricted to the 9 to 5 working hours. They have the option to trade only a few hours or minutes, or even skip a few days before making a trade. What the traders need, however, is a trading platform that is reliable, user-friendly with all the necessary features, an advanced chart station with all the right indicators and if necessary, features that are adjusted to a user with limited computer knowledge.
A broker may opt to purchase software for their platform or create their personalized software. Make sure you test the platform to get a feel of how it works, and if it meets all your needs before getting into a business contract with a broker.
- Customer Service
Customer service is another crucial factor to consider when choosing a trusted FX broker as it lets you know how reliable they are. Check to see if they are able to offer you their services in your local dialect or language, how long they take to respond to your online request, or if they ignore them all together, and how long it takes them to handle your request. If they do not meet any of these requirements, consider looking for another broker.
- Additional Services
Different FX brokers offer various additional services to attract more customers to their platform. Some offer tons of educational material, whereas others organize trading contests with lucrative money prizes. Select a broker with the most useful services to your trading.