How To Choose A Forex Broker
We are often asked which Forex Brokers we would recommend and why?
Firstly, we would offer the following pointers when choosing a Forex Broker:
- Choose a broker in your own country if possible.
- Ensure that broker is registerd and fully regulated in your own country e.g. the UK and regulated by the Financial Conduct Authority (FCA).
- Ensure that all client monies are segregated from the Brokers own company money, this will be the case if regulated in the UK.
- Ensure the broker uses the Electronics Communications Network (ECN) with its’ trading platform. (An automated system that matches buy and sell orders for securities such as forex. An ECN connects major brokerages and individual traders so that they can trade directly between themselves without going through a middleman).
- Ensure the Broker’s trading platforms offer the relevant charrting facilities and tools such as Metatrader 4 or 5.
- Do they offer you a Demo account to first to check out the trading platform?
- Do they provide a decent range of financial instruments to trade such as Forex majors, minors, exotics, commodities (such as Gold, Silver and Oil) and Indices (DAX, FTSE, Dow Jones, S&P500 etc)?
- Do you want a Spread Bet facility or not, remember that when spread betting you are essentially trading against the broker and this also adds a middleman into your trading model. Our view is that whilst Spread Betting can be very profitable and at the time of writing is Tax Free for UK Residents, until you can consistentky make your Capital Gains Allowance every year (currently £11000) then stick with a standard Broker model whilst you learn how to trade Forex. Once you are consistently profitable then that would be the time to consider opening a Spread Betting Account, the same goes for Binary Options.
- Check out the spreads/commisions (if any) offered by the Broker – are they competitive?
- Check out the overnight Swap Rates – are they competitive?
- Do they offer Micro and Mini-Lot trade position sizes as well as Standard Lots? When you eventually start trading a Live account we recommend you start by trading Micro-lot sizes where you would be trading cents per pip and the smallest trade size offered woul be 10 cents a pip. If you choose to Spread Bet then make sure the Broker offers the facility to trade pence per pip and normally the lowest trade size would be 10p a pip.
- Do they offer a ‘No Negative Balance Guarantee’?
- Does the Broker provide excellent customer support when you need it?
- How easy is it to withdraw your money from any trading accounts you may open or transfer money between multiple accounts?
- Nice to have: does the broker provide an online portal to allow you to access your accounts, make deposits and withdrawals and move money between trading accounts etc?
- Nice to have: does the Broker offer decent trading education online and live events etc?
- Nice to have: does the Broker provide Cash Back based upon your trading volume and do they pay you interest on your Trading Account Capital?
When taking all the above into account we would recommend the following brokers in no particular order: