Here we will look at how to find the best Forex brokers and go through the criteria you should consider when choosing a broker to trade with.
One point to make is when choosing a broker ignore Forex broker reviews from affiliates who make a commission from the banners they place near the review – do your own research.
There is a vast choice when choosing an online Forex broker to trade with and while there are many brokers who are scams, there numbers are declining as more and more countries around the world, implement regulations to regulate there activities so the crooks are getting fewer but there still around so the easy way to avoid them is to trade with regulated brokers only.
Best Regulated Brokers
When you choose a broker make sure, the company is regulated and then check who the regulation is with. There are regulatory bodies that cover the UK and USA which tend to be the most trusted but other countries also have regulation like the EU and Australia. My own view is to stick with the top two jurisdictions for regulation which are the UK and USA and either will give you a high degree of protection and some brokers are members of both bodies.
The EU regulations vary from country to country, with Germany having better regulation than say Cyprus which has a huge number of brokers operating from the country. The key is to just do a little bit of research on the regulatory organisations website and see the protection you get.
Don't Deal with Middlemen or IBs
Don't deal with white label brokers or Introducing brokers ( IBs) – there is no reason to, as they serve no purpose at all. They often say you get a better service from them or they can offer you Forex managed accounts, Trading advisors, research or other educational tools but as we will discuss in a moment, you should never accept any help from a broker. Brokers should simply be there to help you execute your trading signals, quickly and at a fair cost in terms of pip spreads and give you accurate fills on your trading orders.
ECN V Market Makers
ECN brokers offset trades in the market on your trading signals, market makers take the opposite side of the trade and if your trading strategy losses, they make money. When trading currencies it would appear that a ECN broker is the better option but this is not so.
In many instances, market makers give better spreads and they can do this, due to the fact they make money when a trader losses. Even though they make money when you lose, it's nothing personal and they don't as many believe want you to lose money. They just know the fact is 90% of traders will lose and work there costs out on these odds.
It's up to you to try and enter the elite 10%. If you can't that's your problem not the market makers. If a broker is regulated, you can use either type of broker and you may find a market maker offers you a better deal in terms of pip spreads on most currency pairs.
Choose Big Established Brokers
Look at how long the company has been in business and also how strong it is financially in terms of its balance sheet. Normally, if a broker is regulated, been around a while and has a strong financial base, its going to be a good one to deal with and its services are good. Try and avoid new or small brokers, sure they can grow but there not proven so – go for length of time in business and a strong balance sheet.
Pip Spreads Commissions
Most brokers offer a simple pip spread for buy and sell and the pips in between earn them money. Many say no commission dealing but this is a bit cheeky of them because they make on the spread so it is a commission in all but name.
Spreads at most of the big brokers are generally competitive and vary by only a couple of pips, between the ones which we consider the best. Should you choose a broker on just spreads? We don't think so, if you are not day trading ( and if you are you shouldn't be for the reasons in other articles on this site) a pip or two won't impact your bottom line to much so the best pip spreads are a consideration but should not be, the over riding consideration when choosing a broker.
The Trading Platform
The Metatrader platform is the most popular but trading platforms, between brokers do vary in terms of what you get. Many offer technical analysis tools, the facility to trade from charts and various tools to manage your account.
The best way to decide the best Forex trading platform is simply to try it in a demo account. Make sure the demo account is a mirror image in terms of prices and spreads, of a live account. Simply try it out and see how easy it is to use and how reliable. Every major broker offers this facility so test drive there services before trading for real.
Support Services You Need
You want quick access to your money and to be able to top up quickly and 24 hour support. Really the support you need is simply in relation to your money and any help you need with the platform – You don't want any other help with your trading plan! Your broker is simply your route the market and should have no say in your trading strategy.
Support Services You Don't Need
Many brokers offer a broker to help you make money which is odd because – if these brokers really could make money, they wouldn't be brokers. They will also offer you research and trading alerts but the research is normally just telling you the news and the trading alert signals are there, to make you trade – they don't work. The idea of taking trading advice from a broker or trading signals appeals to many new traders but following this advice is doomed to see you fail. If you don't have your own strategy to trade which you are confident in – don't trade currency markets.
The New Deposit Bonus
Many brokers offer an account opening bonus which means they will top up your account by a set percentage of your initial deposit but be weary of these. They normally come with you having to adhere to conditions such as – trading so many lots in a certain period of time which means you will have to over trade to get it. Don't worry to much about an initial bonus, when opening your trading account – it's a short term boost but nothing more and the conditions normally make it not worth bothering about.
The Top Forex Broker for You
There are many brokers who can be considered the top Forex broker and to find the best companyfor you, just means following the above advice, doing some research and then trying the broker via a demo account. If you follow the above steps and you will find a broker which is right for you.