If you are interested in trading Forex market, then the first thing you need to do is to find a Forex broker who provides you with the best of the services. Many new traders are confused and frustrated in their search for a good broker. Most don’t know where to begin and find it tough to get the best Forex broker. So, how to find best Forex brokers? The following criteria will help you save a lot of time, energy and money in making this important decision.
1. It should be an approved regulated broker. Not only confirm it on their websites but check out the official government sites of each regulatory body.
-United States: NFA, CFTC
-Canada: CSA, BCSC, CIPF, OSC
-United Kingdom: FSA UK
-Switzerland: SFDF, ARIF, FINMA
-Japan: FFAJ, FSA Japan
-Hong Kong: SFC
-Dubai: DMCC, DGCX, DFSA, ESCA
2. It should offer more products like Forex, CFDs, bonds, commodities, stocks etc. Bigger the business – more the reliability!
3. It should be at least 6-10 years old.
4. It should follow Client Agreement where they offer the same conditions while real trading. For example, some show 1 pip spread while in reality it is already 2 pips. Some offer scalping, while in reality they don’t. If you don’t read Client Agreement, but instead simply put a check box “I agree” in front of Terms and Conditions while applying for an account, you’re doing yourself no favor.
5. Profitability rate is a new metric that has come into picture recently. It is only available to US brokers. They are now required to post the profitability rate of their customers. A broker with a higher profitability rate is likely to work harder to make his traders succeed. This can be done in terms of education, support or anything else.
6. Transparency is the key in Forex market and with the significant growth of Forex social networks, more and more genuine Forex brokers are connecting the traders. So, confirm if your potential broker is available on social networks such as Currensee or FXBees? If it is, there are fewer chances that it will hide anything.
7. The positive reviews can be tricky thing. So look for genuine negative reviews. Google the broker’s name with words such as “sucks” or “withdrawal” to see if clients had troubles with the broker, especially in the sensitive field of withdrawing money. If there are too many genuine complaints, then there is a real trouble.
8. Most brokers are market makers, meaning they create the market between their traders. This may easily lead to a conflict of interest between the broker and the trader, as the broker is also a participant in this market, and may bet against the trader. So, it is advisable to opt for non dealing desk – NDD/ECN/STP brokers that generally send the orders to bigger institutions and just serve as mediator taking commissions.
Some good recommended Forex brokers are – Dukascopy, Interbank FX, FXCM, FXPRO, FXDD
Now it’s your turn…..
Feel free to share your experience and thoughts in the comments area.
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