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Forex Brokers

5 things to consider when choosing a Forex broker

 
 
Nowadays it is easy to find brokers. But what makes one broker ideal for you?
In this article we will try to help you with the top 5 key factors which
can help you find the best broker for your trading strategy.
 
 

 

Let’s make a list of the top 5 key factors which can help you choose wisely:

 

1. Security

It is essential to choose a broker that you can trust. Just imagine the possibility of funding your account, trading successfully for a period of time and then when you’d like to withdraw your earned money the broker just disappear. Unfortunately that is not a rare case. There are a lot of reviews about brokers who just want your money.

Identifying a company like this is very important and it can be done easily. The ideal broker should be a regulated forex broker. It means there are strict rules which applies to such a company. Unregulated / offshore brokers have no regulatory agencies who can control their financial operation.

 

2. Market Maker VS ECN Brokers

Market Maker brokers provide the bid and ask prices from their own system. They fill your orders by taking an opposite position so if you buy 1 lot of GBPCAD then they must sell 1 lot of GBPCAD to you. This way the broker will benefit from the client’s loss only.

ECN brokers operate on passing trader’s orders straight to the liquidity providers and it is often referred to as STP (Straight Through Processing). The main benefit of trading with an ECN broker is that there is no conflict of interest. You’ll not trade against your broker. The broker will get it’s commission just for passing through your trade.

 

3. Spread / Commission

No matter if you are a scalper or a long-term trader you will always face transaction costs. Market Maker brokers hide their operation costs in spread. This means you’ll pay every time you open a trade but you won’t know the exact amount. You’ll get worse trading conditions because you have to start from a worse price level.

Unlike ECN brokers they mostly operate with commission based accounts. You’ll pay the exact price every time you open a trade.

Myfxbook has a site dedicated to compare spreads of different forex brokers.

 

4. Execution

It is very important that your broker fills your orders at the best possible price. When trading during normal market conditions there is no reason not to get filled at the same price or very close to the price where you want to sell or buy. During news the spread can be wider and brokers tend to fill your orders slower. A few pips difference can make your trade much harder.

 

5. Deposit & Withdrawal

When a broker forces you to a specific deposit or withdrawal method then you should be very cautious. A good broker will allow you to access your funds with a hassle-free way. They don’t have any reason to make it hard for you. So look for a broker who supports a variety of deposit and withdrawal options.

 

Our personal favorite ECN broker is IC Markets for 4 years. But be sure to read reviews about fx brokers and decide on your own. We recommend to check out these trading forums: Forex Factory, Myfxbook and Forex Peace Army.

 

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions. Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.