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How to choose a Forex broker | 5 Practical Steps




There are two most common ways of choosing a Forex broker:

1) Simplified or "lazy way" — which is to read broker reviews, and based on stars and feedback make a choice.
There will be no guarantee, however, that a 5 star rated broker will be the best choice for your trading needs, or that the reviews you've read were actually genuine (unfortunately, that's the reality of online reviews submission).

2) Professional way — which is to do your own research while making reading reviews a part of that research.
We're going to describe the steps of making a professional choice:


Read more...


Broker discussion area

Baha

January 8, 2010

Hi Guru,
Since FOREX enabled the chance for retail traders to attend the big market with a little money it's really amazing cuz hearing guys who made huge amount of money even with a little money, awesome! So, me too interested in this type of industry especially currency exchange market in the forex. I have been trading a demo version of MT4 platforms from different brokers and now really wondering to be in LIVE to trade, while demo and live totally differs, i made some experience with demo. I read many articles about forex and the crucial step for me these days is the reliable broker without DD, offering ECN with low variable spreads on MT4 platform no matter the commission(but will be best if with low fixed commssions for one lot) and uder the regulation of appropriate authorities. So, I found one and really want to open account at FXOpen within a week but being sure i need some clarification. They claim that they offer ECN/STP account services with as minimum $1000 from 2009, and namely commissions they charge is a bit unreasonable, seems they are ok but there is one problem. it is the location, under the regulation of Financial Services Commission (FSC) of the Republic of Mauritius. Company No.: 084573 C1/GBL; Category 1 Global Business № C108006805 License. Here is what I want to ask from you is to give a piece of advise while you are much experienced on this matter.
Many thanks,
Baha

BrokerGuru

January 9, 2010

Hi Baha,

Please find my answers here:
http://www.100forexbrokers.com/broker-discussion/fxopen

RahmanSL

January 24, 2010

Hi BG,

You really got to consider opening a section for "Just chatting" as I don't know where to post this.

I was at Forex Peace Army and bumped into another of our guys in this forum referring a Newbie to check ouit your site in choosing a Broker. I, matter of course, chipped in to refer to 100ForexBrokers.com for information on Brokers and other stuffs.

Just thought you like to know!

Oh yah! There is a site called “Forex Signals / Fire pips” which gives free daily signals sent to your e-mail. I am registered with them and received their signals daily and someone over at FXopen forum is apparently using the signals to trade and is getting over 300pips profits.

Forex Signals does not ask for any payments but instead;
Quote: "How can I return the favor or How can I contribute?
Glad you asked. There are several ways of doing it:
a. If you are a webmaster with website / blog, consider linking back to us, eg. Forex Signals
b. If you are active on Twitter then you can Retweet my tweets.
c. By giving thumbs up on Digg and FreshPips. ( The little icon on the left of every post )
d. Donating some of your profits to any charity of your liking or Join my team on Kiva.org
e. If above mentioned things are little to much for you then you can simply help by participating in conversation on FaceBook, Twitter and Blog (via comments). This will not only help out other fellow trades but also keep me motivated”.

They also operate a web site dedicated to getting micro loan for the poor in third world countries.
So,hmmmmmmm, I will check up more on them later as I like their concept.

Cheers!

RahmanSL


RahmanSL

January 24, 2010

Hi BG,

....hehehe...this might take you aback after all the back-and-forth posts about various brokers!
But I am actually considering going Live with.....da-dah...Easy Forex as my first real Live account broker.

My assigned broker wrote this when I e-mailed her my intention:
Quote:
"Thank you for your email.
With us, you should consider that our spreads are fixed, not changed during different market situations. Other forex brokers have the flexible spread condition and it could be a setback for you.
Also, we have Freeze Rate function that means you can get 1 pip discount for your trading when you time it right.
You also don’t pay for deposit or withdrawal while other brokers could charge you up to USD 50 for a withdrawal. Other brokers also might require you to leave some free balance in your account at all time, while with Easy Forex, you can leave your account empty and keep it with no cost.

You see, spread is NOT the only cost and consideration.

There are plenty of hidden costs that other brokers don’t want you to see and mask it with lower spreads. In the end you might pay more to them.
So, please consider the points I mentioned above". :Unquote.

So, as you are my most trusted person in this entire forex world, I would most welcome your opinion before I make that jump.

Thanks for all your help.

Cheers!

RahmanSL

BrokerGuru

January 28, 2010

Hi RahmanSL,

You know I'm not advising on making a final choice, but I can comment on your information.

The advantages they showed you are good and would save you some cost down the road.
Every broker has its own advantages, so when it comes to working with a future client, they'll use everything they have in their arsenal.

Trading with fixed spreads allows you to estimate the cost of trading more effectively. Besides, it is true that with variable spreads you may get quite wide spreads at times, which could cost you more money down the road if you're a frequent trader (with the exception of ECN trading, since there you have lower spreads more often, so when they widen, it is not a big deal). On the other hand, Easy-Forex's spreads aren't the lowest among market makers. (Also, I don't know why, but sometimes on their live quotes ticker on the main page you can see the spread for EURUSD 3 pips, but sometimes also 4 pips... Just my 2 cents.)

If freezing the rate is really what I think it is, that's very good, because you'll be probably getting fewer requotes with it. But, don't take my word for it. You have to try it to know the real answer.

No broker would want you to leave, even when you pockets are empty, therefore many would allow an account to idle without money. Regarding the deposit/withdrawal savings, that's a definite plus.

In addition, I hope you've practiced enough on their demo with the exact amount of money you want to start with, because if you don't, and you go for a minimum deposit (either on mini or standard account) you may find it challenging to trade with 0.05 lots and 0.5 lots accordingly without practice, e.g. you'll quickly feel the insufficiency of your buying and selling abilities with a minimum deposit due to the size of the minimum lots.
Good luck!


RahmanSL

January 28, 2010

Hi BG,

Thank you very2 much for your kind and honest advise which I will consider with great care as I do value your opinion.
I have came to realize too that I am considering going Live trading for the sake of trading and to see how I would do on a Live account. Anywhere, I might as well "burn" (hopefully not) USD500 to USD1000 as I would lose that on "other form of trading" anywhere. But at least in forex trading, I can posssibly get some long term "trill"; yah, instead of these one to two days "trill".

Ok, BG, thank you so much once again and I shall be in and out as when my time permits as I have some pretty hectic scheduled before our long holidays in my region (upcoming Chinese Lunar New year starting 14 to 17 Jan 2010).

Cheers and all the best!

P/S: It appears I am not the only one promoting your site 100ForexBrokers in other sites as I have came across some other traders doing that too.

BrokerGuru

January 28, 2010

Alright, all the best in your trading adventure!

Also, thank you for supporting 100ForexBrokers!


RahmanSL

February 6, 2010

Hi BG,

First and foremost, be assured that I WILL drop the name of your site wherever I can...it's also very informative which I am sure other traders will find so too.

Secondly, I still have not started live yet because, as seem to be the case, I have changed my mind with whom I should go live with. Out of the 9 brokers, I am active only at Tadawulfx and EasyForex platforms. I am thinking of Tadawulfx now as they too have WTI oil, plus Gold & Silver...and you should know my fascination with these commodities (much like a moth to open flame...hehehe)....and which comes back to my once-upon-time innocent enquires about our friendly neighbor broker ForInvest.

Well, to cut a long story short and which I'll not post here, go over to Forex Peace Army and you will find them in the spotlight in two topic forums plus in the "Brokers Reviews".
So, now I know plenty, in fact more than what I want to know about this (supposedly) "Broker of the Year 2009 award" which is a bogus claim, among other things.

Alright, I will not write anymore on this ForInvest broker as it is a complete waste of time..including using them as a broker. Like I said once before, if it is too good to be true, then it probably is.

Cheers and all the best!

RahmanSL

RahmanSL

February 6, 2010

Dear BG,

At the start of my forray into the world of forex some 4+ months ago (2/Oct/2009 to be precise when I first registered for a Demo Account with one broker picked out from a side advertisement from a web site), which seems years ago, I am still standing at many cross roads and still very undecided which road to travel.
Shall I go down that road with this broker or should I go with the other broker? So many uncertainties, so many reviews by so many faceless traders, so many obvious & some not so obvious self advertising & reviews....uncertainties, followed by more uncertainties. Questions upon questions.

I thought I should go live with one broker, then I had second thoughts...then I thought I should go with the other broker instead, but hesitated as it could be the wrong decision..then again...the story goes.

But the single strangest, and possibly the weirdest and bizarre experience, which I shall find hard to forget would be the case of that broker's reaction to my simple request for more info on their company, especially for their tight spread for WTI oil. From a relatively unknown broker, I think I am responsible for them being quite well known now, but not for being a reputable broker.

Anywhere, BG, I know all too well your stance on recommending or for not recommending brokers, and I shall not ask you to do so. But, if I ask for info, you can comment on them which, as I have mentioned many times before, that I do value and trust.

Tadawulfx: STP BROKER with fixed spread. Have both good & bad reviews, but their reps seem open & reply to questions in open forums. Trading platform execution Demo): Reasonably good and reliable. Been practicing on their MT4 Demo account for over 1 month straight and made some good profits too, but also lost some too in bad trades. Have by beloved commodities trades of WTI oil and Gold too. FSA registered. Allows scalping with no known restrictions.

FXopen Level2: ECN Broker with fixed spread. Basically same as for Tadawulfx, and also with trades for my beloved commodities trades of WTI oil and Gold too. Not registered with FSA and NFA. Compensated with open forum with open posting sections for many nationalities. Seems to allow scalping as posted in their open forums.

MB Trading: ECN Broker with fixed spread. Basically same as for Tadawulfx & FXopen, but none for my beloved commodities trades. NFA registered. Allows scalping with no known restrictions.

I will keep Easy Forex (even though they are Market Maker with high spread) with some live "seed" money simply because I have found some info on their trading platform to be of value to me while trading in MT4 platform which had helped me made some wise & profitable trades.

So Big Guru, hopefully this would be the last time I have to trouble you in helping me out in the above.

As always, thank you for all your help, advices, directives, and patience with me which will be with me for the rest of my trading days. And, I shall always be indebted to you.

Very sincerely,

RahmanSL

BrokerGuru

February 10, 2010

Hi RahmanSL,

I can highlight pros(+) and cons(-) for those brokers based on the facts we have:

Tadawul FX
(+) properly regulated
(+) no dealing desk (STP)
(+) has required commodities
(+) scalpers are actually welcome
(+) good support
(-) min lot size is 0.05 lots, which is $0.50 cents per pip. It is not a problem if you're an experienced trader, but could create some inconvenience if you're just starting it.
() spread are fixed

FXOpen Level 2
(+) regulated. It's not those large regulators (FSA UK or NFA), but I think it is fairly sufficient
(+) no dealing desk (ECN)
() spreads are actually variable
() you have to pay commission with Level 2 (ECN)
(+) has required commodities
() there is a scalping policy (not sure if it is applicable to ECN), which says that you have to hold a position for at least 60 seconds.
(-) minimum lot size with ECN account is 1 lot, which is $10 per pip - it's not suitable for beginners, unless your deposit is no less than $10 000 and you're comfortable with risking $100 for every 10 pip move in the market.
(+) support in the forum is a plus

MB Trading
(+) properly regulated
(+) no dealing desk (ECN)
() spreads are again variable
() you have to pay a commission
(-) no required commodities
(+) scalping is allowed
(+) min lot size is 0.01 lot - suitable for traders of all experience levels

So, that's how these brokers stand.
You have to keep in mind, though, that above all important factors, such as: spread type, scalping, hedging policies, dealing desks or STP/ECN, quality of support etc, there is still one Major Factor - The Cost of Trading.

Your trading will eventually boil down to numbers, where the key role will play:
a) the cost of spread
b) the commission cost
c) the minimum cost of 1 pip (determined by the min lot size)
d) the risk of getting a margin call (with any deposit below $10 000 you need a proper leverage)
e) the cost of rollover
f) the minimum distance for TP & SL. (Some brokers don't allow placing stops closer than 10 pips to your entry point, so you have to be aware of that. The above mentioned brokers don't have this minimum distance policy, as far as I know.)

So, that's what eventually will dominate and determine your account balance shifts as you trade.
Therefore, when looking for a compromise in between pros and cons for every broker, try not to over-compromise too much against the Cost of Trading.

Vishal

February 13, 2010

Hi guru

I have open forex trading a/c with IFOREX. where it is good for stay with this broker , i am staying at India.
Now i am practising with demo account.
what about this broker.
Can please suggest on this?

Vishal


BrokerGuru

February 13, 2010

Hi Vishal,

I don't have any experience with this broker.
All I can say is that they are not regulated; plus they are market makers, which means that they trade against you, and you have a natural conflict of interests.
You can sure stay with them, but do not postpone the first withdrawals when you make profits. When you have more positive experience with them, you can be more relaxed.



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