Thank you!

Thank you.

1. By checking if there is a physical address on the broker's website.
2. By calling in and asking about questions that concern you, while inspecting the quality of customer support as well as clarity of the answers given.
You may also ask if your investment is protected, in other words, where they hold your money. Also do they provide any guarantees for paying you out the profits you've earned (this question should sound more like a concern, and they should be able to face it professionally).
3. By checking whether this broker is regulated by any authorities. You'll find the list of supervising authorities here: http://www.100forexbrokers.com/how-to-choose-forex-broker
4. By reading broker reviews on various websites.
5. By trying it yourself opening the smallest account size available.

That's very true.
Most of the Forex brokers nowadays warn about risks of high leverage trading, few however, are going deeper into the details as to how one should trade safely with a high leverage.

I think I can address this topic today, why not?

The goal of a Forex broker (as well as a trader) is to allow a trader to invest any amount of money he/she wants (or what is required) and STILL BE ABLE to participate in the currency exchange market.

To trade Forex, a trade should be able to buy/sell currency lots, which come in several well known sizes: 1 lot = 100 000 units of the base currency, which means that if we have EUR/USD pair, Euro will be the base currency, so in order to trade 1 lot we need to buy 100 000 Euro at once. Does an investor with a small account can buy this much? The answer is - No.
How on earth a trader can participate in trading then? He/she needs leverage.
Leverage allows to virtually expand one's account beyond its limits: when we say "an account has 400:1 leverage", this means that for every dollar we have on the account, a broker will give us 400 times more, leveraging our ability to buy/sell the required amount of currency.

So, now if we say that we "opened a mini account with $1000 US at 400:1 leverage", this means that our buying ability will be equal to $400 000 US dollars. Can we buy 1 lot (100 000 units) now? Yes, we have the ABILITY, but it would be very silly to actually go for it and start trading with 1 standard size lot having just $1000 US on deposit...

I think by this time, everyone has got an idea what leverage is needed for.

Now, let's go to the actual topic of a correct and safe usage of the leverage:

Using leverage correctly is tight up with the correctly chosen amount of currency you'll be trading=risking at any time, in other word the lot size you will trade.

A trader should be well aware about the value of 1 pip (the smallest currency shift/move):
for 1 standard lot, which is 100 000 units, the value of 1 pips will be $10 per pip. This means that by earning 20 pips a trader will earn $200, but if he loses 20 pips, he'll lose $200.

If we go back to our $1000 US account example above, and I ask you again whether you would take a 1 standard lot size trade, would you now hesitate to say 'NO, NEVER". Because risking to lose $200 on a single trade where market moved only -20 pips against you, is a very immature decision... in 5 trades, totaling of just -100 pips, you'll be out of trade with a zero account balance! (and this is not including spreads yet...)

So, what are other options for a $1000 account?
There are smaller lots sizes:
0.1 lot = 10 000 of the base currency, where 1 pip is equal to $1
0.01 lot - 1000 of the base currency, where 1 pip is equal to 10 cents.
and smaller lots under 1000 units of the base currency, which can go as low as 1 cent per pip or even less.

Your goal is to pick the best lot size that would correspond to your account balance and would not allow you to lose a lot of money on a single trade.
The common rule is to risk no more than 2%-5% of your account balance, which in our example with $1000 would be $20 to $50 dollars per trade.
If you followed me well, when we talked about lot sizes and the cost of 1 pip for each lot size, then you can easily calculate that:
$20 dollars equals to just 2 pips(!) if you trade a 1 standard lot.
$20 dollars equals to 20 pips when you trade a 0.1 lot.
$20 dollars equals to 200 pips when you trade with 0.01 lot.

Now, think about your trading strategy: at what distance does it require a stop loss to be placed? Are you a long term traders, an intra-day trader or a scalper? What currency pair(s) do you trade: volatile ones like GBP/JPY, or regular ones like EURUSD?
Depending on this you should be able to quickly figure out your safe trading lot size, as well as the amount of lots you can trade.

How does the leverage relates to all this? A leverage is on your side to enable you to trade.
With every trade you take, you have to meet a required margin - an amount of money which will secure your trading account and won't allow you to go overboard and end up in a negative account balance territory - this never happen in Forex. All accounts due to their simple margin requirement rules are protected. So, a leverage allows you to meet that required margin. Imagine that you go without any leverage: you have $1000 US account and you look to buy 1000 units (0.01 lot) of EUR/USD, you 'd need 1000 EURO to complete a transaction, which you won't be able to do, since US dollar has a lower value comparing to Euro. The trading platform would decline your trading request telling you that "You have insufficient funds".
Things would be different if you leverage your account: your buying ability increases proportional to your leverage and a trading platform will allow you to make a trade.

So, that's what leverage is for: it allows you to participate in currency exchange having little money invested. It is your responsibility, however, to use the leverage in a smart way and control risks. If you do so, you can take the highest leverage, and never be worried again that it will "kill your account", it never will if you have proper risk control in place and don't overuse the buying/selling power given by the leverage.

Trade safe!

Thank you for your feedback!

On this website I've gathered the most complete list of ECN brokers as well as the list of highest leverage brokers. Up to this morning, I know no other brokers who fits these categories.

Hi David,

I have no experience with those two brokers.
Here is, however, what I know about them:
SFXB - SwissFXBroker is in fact an Introducing broker, which is not registered with NFA. I've send a request lately to learn who is their primary broker.
Update: for some reason this broker doesn't want to tell about its affiliation partners. They do not answer direct questions professionally. Also I found that other feedbacks online, which indicate that other traders had difficulties learning the truth about this broker as well.

FinOdds is not registered with NFA either, has absolutely no info about company, no address, no customer support numbers. On the top of that their customer support system, where you have to submit a ticket is rather dead... Out of 4 requests I got no replies at all for more than 2 months now...
Should I add something about the comfort level at this point..? I think no.