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How to choose a Forex broker




As much as reading reviews about Forex brokers can be helpful, it also can be confusing and overwhelming, considering the number of Forex brokers nowadays.

Why not start by creating your very own List of broker features needed?
Choosing your first (or next) Forex broker can be much easier when you sit down and make a Wish list of service features desired for trading.

Questions to add to your List:

- what currency pairs are you going to trade?
- what spreads would suit you (fixed, variable, how many pips)?
- do you accept paying a commission for trading Forex?
- what would be your minimum investment (account size)?
- what leverage do you need?
- what tools, indicators do you need for trading?
- do you need a specific trading platform (like MT4)?
- do you want to scalp?
- do you want to hedge?
- do you need a trailing stop?
- do you need "one-click-trading" execution feature?
- do you wish to have mobile phone trading feature and/or trading alerts?
- do you care whether it is going to be a ECN/ STP or a Dealing Desk broker?
- do you care about reputation of a Forex broker? You must, actually, for the safety of your investment.
- which way (wire transfer, Paypal, credit card etc.) can you transfer and receive funds? There could be restrictions depending on the country you live in.
- how much would it cost you in fees to pay for funding, transferring, withdrawing your money?

Sort those questions by the level of importance, add your own and begin the search.

After narrowing down your choice to few Forex brokers, it is time to make deeper research by visiting broker's websites and reading about their Forex trading rules and policies, understanding the terms; getting a feel of the transparency of the business they do: availability of addresses and phones, customer support services, presence of the information of regulatory institutions they are supervised by.

The last is important: your best choice would always be to open an account with a Regulated broker - a broker which is registered with appropriate authorities and remains under their supervision and regulations.

- United States: NFA, CFTC
- Canada: BCSC, CIPF, OSC
- United Kingdom: FSA
- Switzerland: SFDF, ARIF, GSCGI
- Sweden: FI
- Denmark: Danish FSA
- Spain: CNMV
- Japan: FFAJ
- Hong Kong: SFC
- Australia: ASIC, AFSL

A tip for the right attitude to choosing a Forex broker: Your researching approach should be somewhere similar to the process of choosing the right bank to trust your money to: reputation, transparency, convenience of carrying operations with money, good customer support.

Let your choice of a good Forex broker be easy and rewarding!



Broker discussion area

David

March 24, 2009

Hi All the respected and experienced players/borkers out there,

I have been searching for a broker to open an trading account. However, every company that is found in the internet had been critisized somewhere somehow. I really run out of idea and do not know who to trust.

My request is just to look for a broker company who are

1. Regulated
2. NDD/ECN/STP
3. Low spread
4. Min deposit
5. Min lot (trade size)

Appreciate if the gurus can give me a good piece of advise.

Thanks
David

BrokerGuru

March 25, 2009

Hi David,

It is true, you will never find a broker which wouldn't been criticized sometime somewhere (unless it is a very new Forex broker). The thing is, you should be selective as to which traders' reviews to read and which to skip. For example, a review from a trader who claims that broker has "stolen" his money by bringing a margin call or taken out his stop during news hours would most likely be a review of a beginner, who hasn't learned the rules of trading yet, but he is already screaming and rating the broker as a scam.

Another example, a trader who is blaming broker for not accepting his application for a live account, or a broker who delayed the deposit, or a broker whose client support "sucks" (sorry).
An account application can be declined if a broker believes that a person (according to his financial status, job, average earnings, etc) might have not enough assets to trade Forex.
A deposit can be delayed when a trader has failed to provide sufficient data, required by the broker, or typed in an incorrect information, for example, a wrong account number.
The quality of a client support is a subjective factor, which in addition doesn't play a crucial part in one's trading. (If a broker hired some agents oversees, they will most likely be less competent...)
However, if any of the complaints (declines, deposits, client support) are being repeated over and over again, things are most likely serious with this broker, then I'd pay attention to it.

When you read a comment, most of the time you can tell whether a trader has any trading experience or not, then you can decide if the review has a value for you or should be ignored.

Reading brokers reviews you need to focus most of all on: trading platform speed, stability, overall order execution, slippage, re-quotes, spreads, performance during news hours and, of course, a quick trouble-free withdrawal procedure.

I can't suggest any particular broker, it is against this website policy. Besides, a research is something every trader should do on his own.
Nevertheless, there has been a lot of requests like yours, so we have prepared our own independent report, which you can now find at:
http://www.100forexbrokers.com/top-10-forex-brokers

Hope this will help you to launch a new search for a suitable Forex broker.

David

March 26, 2009

Hi BrokerGuru,

Thanks a lot for your information. It helps a lot. In fact, I have gone previously through so many websites (brokers that not even in your lists here) and have come to no conclusion.

Thanks
David

Joe

March 31, 2009

Hi Guru,

I must say, this is a very informative site! I live in New Zealand and I'm wondering if you can tell me anything about LatitudeFx? They claim they are have STP, which I had assumed (before coming to this site) was equivalent to being an ECN. However, they don't claim to be NDD, and I can't find any mention of commissions on their website. Any information would be much appreciated.

Cheers,

Joe

BrokerGuru

April 7, 2009

Hi Joe,

Latitude Fx is an NDD (no dealing desk), STP(straight through processing) broker.
They are not an ECN, however. ECN always charge commission, while STP may or may not charge it.

There is more on Forex broker types here: NDD, STP, ECN brokers



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