First off, make a list of forex brokers of interest. Once done, compare forex brokers by a number of criteria.
Second, choose a few brokers that attract you most and open demo accounts with them to give a try.
Along with trading, it is no less important to check brokers’ customer support services to realize whether this assistance is good enough to meet your daily needs and whether the support is able to reply to your queries quickly and professionally.
When rough shaping is done, finalize your choice of a broker. Weigh all pros and contras once again.
After a well-balanced solution is formed, it is the right time to start trading for real: now you have all the necessary expertise to register a real account with the forex broker.
Actually, the main challenge when choosing a forex broker is to specify which trading parameters are essential for you. Each company offering brokerage services has both strong and backward points, and you are the one to decide which of them are critically important, and which can be neglected.
There is a method that might be very efficient in helping you to make the right decision. Consider the issues below before you decide in favor of a forex brokerage. Perhaps forex ratings reviews and comments will be crucial in forming your opinion. So, please revise:
- The company type: is it a broker or a dealer? What’s the capitalization of the company?
- Trading platform(s) offered: whether they are popular, well- or little known; are they reliable, what are the pitfalls?
- Types of trading accounts. Are there accounts for traders with various levels of skill, amount of investment, and trading preferences?
- Fee and commission structures: extra costs a trader has to pay.
- What kind of bonuses and promotions does the company offer?
- Company’s standards regarding leverage and margin calls.
- Client support: is it reliable, efficient, and available at any time when you might need assistance?
- Regulation: Which license(s) does the company have, at which jurisdictions were they issued?
Each of these points is critically important. To avoid any misunderstanding of these statements, we invite you to get acknowledged with their detalization below.
Check our Forex Brokers’ comparison tool to obtain all the basic information about the best forex brokers that you might need. With us you are able to figure out strengths and peculiarities of different forex companies at a glance.
Retail forex trading is offered by various types of companies: brokers, dealers, ECN brokerages.
Forex brokers are in fact intermediaries between forex traders and market makers. They are also classified as NDD (Non Dealing Desk), which means that clients’ orders are processed automatically, with no interference of any dealing desks.
The brokers are implementing STP (Straight Through Processing) method to send the orders for execution by another party. As a rule, brokers charge fees; in some cases the fees are compensated by the market maker accepting transactions at their dealing desk.
The size of spreads depends on the system used (dynamic or fixed) and on the pricing set by either market makers or dealers conveying the transaction.
As for the dealers, or dealing desks, they are an integral part of any market maker, an important instrument used in monetary practices.
Market makers communicate with global banks to constantly keep forex operations under control and to minimize overall risks regarding revenue and conversions.
Throughout the day forex traders receive two-way pricing from their brokerage companies. “Fixed” quotation means that a price remains unchangeable till the end of the day, whereas “dynamic” spread system implies changes in quotation following changes in liquidity in certain currency pairs.
Comparing daily business of various market makers you will soon figure out that each of them offers their own price in every currency pair, which slightly differs from prices offered by other forex market agents.
ECN is a term used in retail forex. ECN in forex is completely different from ECN as it is understood on the equities market. On the forex market ECN acts as a broker and co-operates with various market makers and dealing desks. ECN receives prices and quotation amounts from dealers and distributes them to customers.
As for the spreads, on ECN they are set by the difference between the best bid and the best offer at a particular moment.
At that ECN is responsible only for the order transmission, but does not bear responsibility for the order execution. ECN earns by collecting fees paid by the customers and receiving rebate from brokers. The larger is the volume of the order flow provided by ECN, the higher is the reward.
The market makers set their trading volume as they see fit depending on the liquidity they have at their disposal at a time.
Which trading platforms are currently offered by the forex market leaders? Check our Forex Brokers’ comparison tool and make a choice of your own.
Traders are free to choose which kinds of hardware and trading applications suit them best. Some traders choose web-based applications, whereas others stick to desktop software. Choosing the right trading platform is essential for traders in relation to their trading preferences.
Any trading platform that comes into the view of potential clients should prove to be reliable enough to avoid frequent freezing or system crashes, which are likely to occur during global breaking news or events. Therefore, we consider reliability to be #1 feature of any platform, whereas design and facility come next. This is of particular importance to aggressive traders (intraday or scalpers) making frequent trades in long sessions and at any time in a 24-hour period.
A trading platform should be efficient in placing an order or closing a trade promptly.
One-click operations are advantageous in trading and managing limits, stop-losses, etc. Many platforms also offer such benefits as additional tools and charts.
Trading accounts depend on the amount of lots that are traded, and therefore they fall into a number of types: standard, mini, micro accounts. A standard lot consists of 100,000 units, a mini account is ten times smaller (10,000 units), and a micro account is hundred times smaller and amounts to just 1,000 units. And, with some brokers it is possible to configure an account of an individual size.
Accounts with small amounts of capital are basically addressed to forex newbies who have recently entered the forex market and want to try their hand in currency trading without a risk to their well-being.
Which types of trading accounts are currently offered by the leading forex brokers?
4. Fees and Commissions
Amount of fees and commissions declared by a forex broker is sometimes crucial for a trader making their choice of which forex company to trade with. With some market makers it can be found that they charge no fees and no commissions. In such case they earn from spreads, so check how many pips have to be paid to the broker per trade.
Usually fees are paid for exchange operations, data provisions, and regulation. Generally, what needs to be understood by a trader is how big are factual costs, which depend on trading amounts, frequency of operations and other account statistical data. To have an individual solution, a trader has to calculate all the expected fees and correlate them with the trading model that is to be applied.
All in all, all the commission structures that can be found at present fall into three categories. All of them are based on the spread amount, which is the difference between selling and buying price. These categories of commissions are: fixed spread, variable spread, percentage of the spread. With some brokers it is possible to choose between a fixed and a variable spread.
Fixed pricing means the prices are established for entire trading day and won’t change within it. Dynamic spread system follows the dynamic in the traded currency pairs.
Traders looking for very tight spreads are recommended to deal with a broker who passes trader’s orders to a large market makers group, like this is done by the ECN companies.
In case of market volatility or lack of liquidity in the markets brokers apply so-called requotes meaning the trades are executed at a price different from the offered one, and eventually the clients pay more pips than average. This practice won’t suit such clients, as day traders and those who trade on the news. We’d recommend that you try trading with fixed spreads, which means that they are somewhat higher, but at that is guarantees that all the client’s trades are executed instantly and at an agreed price.
No matter if the fees and commissions are charged or not, the golden rule is to make prior investigation about the broker and figure out whether the company of choice has good reputation on the fx market and whether it has connections to the well-established banks to provide any required amount of liquidity to the traders.
Which are the commissions and spreads offered by the leading forex brokers?
Bonuses and promotions are sometimes a key factor determining the trader’s choice of a forex broker. These days those brokerage firms are more popular and attractive which not only offer good trading conditions, but also have extra incentives.
Usually special promotional packages are designed for all traders’ types and levels and depend from their investment amount, frequency of trading, knowledge of aspects of forex trading, etc. Among the most outgiving fx companies are Fxpro, NordFX, FXCM, but this list is not complete.
Take a notice of the latest promotions offered by the leaders of the forex market!
6. Trade Execution Policy
Some forex brokers are known to offer high level of leverage, which appears to be attractive to traders following aggressive strategies. At that we’d like to notice that high leverage is acceptable for traders with significant experience on the market.
High leverage can lead to great profits, but along with this is it times and times more risky. Traders with conservative approach should rather look for moderate leverage offers. Another important aspect is that some brokers offer fixed leverage, whereas others have it adjusted to particular currencies.
Margin call policies should as well be taken into account when choosing a forex broker. There are brokerage firms operating on FIFO (“first in, first out”) basis, and some other companies act on LIFO (“last in, first out”) basis.
Another specific detail of a forex company performance is how trades are carried over the weekend.
It may be important for a trader to figure these specialties before starting trading on a real money account.
Quality customer support is one of the key services of any broker. Many brokers provide 24/7 support to correspond the needs of their traders who might need assistance at any time. Besides, an array of languages offered by the broker is a benchmark indicating how active globally the broker is and whether this company is apt to multilingual trading community.
The website of a broker should be clear enough to describe the basic issues that may occur while trading. Being explained properly, a problem can be resolved and eliminated by the trader at once. Of course not all the cases match the FAQ section of the site, and hence professional support team ready to assist the trader at any time is critically important.
At this point it won’t be out of place to focus on the means of communication offered by the broker: it is an additional advantage if the broker communicates via various media: phone, live chat, e-mail, and it would be an asset if the trader knows the name and position of the person in charge.
It is recommended that the trader checks the efficiency of the broker’s support at an early stage, when trading on a demo account, for the purpose of minimizing money losses. It is optimal to know the level of competence of the broker’s stuff in advance.
Forex business is regulated differently throughout the world, and official registration with the financial authorities of any particular country can be very specific.
It is essential that a trader or investor chooses a brokerage company which business activity is under control of a relevant regulatory agency. Many brokers choose to get registered in offshore jurisdictions, whereas other forex companies choose to stay onshore. Generally, offshore statutory provisions are more liberal and easier to comply with.
Regulatory agencies with fundamental approach and strict principles are based in Europe (first off, in Switzerland and Germany), United Kingdom, United States, Japan and Australia.
It is absolutely necessary that the trader has clear understanding about the regulatory status of their brokerage company or dealing desk. Regulatory status is an essential part of any business entity providing forex services and by this any potential trader can form an opinion about reliability of the forex broker.
CapitalXP, a brokerage firm, has entered the stock market in 2015, acting as an intermediary that allows for margin trading with any CFD contracts and currencies. The broker quickly gained trust among investors and traders, providing them with...
Regulation: not regulatedCapitalXP information
FBS is a reliable Forex broker trusted by millions of traders around the world. The company has been in business since 2009 and now is present in over 190 countries.
Working with FBS is easy, convenient and profitable with exclusive terms to meet...
Regulation: IFSC, CySECFBS information
FxPro has been operating since 2006. For 12 active years, it confidently became one of the world's leading Forex and CFD broker. An impressive list of more than 60 international awards is constantly being updated, and the number of loyal...
Regulation: CySEC, FCA, FSB, DFSA, SCBFxPro information
HYCM is online trading division of Henyep Capital Markets, which is a major investment company established in 1977. The company’s headquarters are located in London, United Kingdom. The Henyep Capital Markets activities are regulated by such...
Regulation: CySEC, FCA, MiFID, DFSA, SFCHYCM information
GMOTrading is a global online broker that puts at its clients’ disposal multiple trading instruments that comprise forex, CFDs stock indexes, such as as FTSE Futures and DAX Futures, and commodities such as oil. GMOTrading caters to a...
Regulation: CySecGMOTrading information
Alpari is one of largest forex brands around, and at Alpari International we work hard to make sure our clients make the best trading and investment decisions. Our broad range of services enable you to get the best guidance, advice and resources to...
Regulation: FCAAlpari information
Grand Capital - one of the oldest international brokerage firms. Since 2006, provides traders convenient online services for trading on Forex. GC is leader in the field of binary options and derivatives trading (CFD). Actually, GC is the first...
Regulation: CRFIN, KROUFRGrand Capital information
USGFX is a multi-award winning, multi-asset global FX & CFD broker, enabling clients worldwide to trade currency pairs, indices and commodities in premium trading conditions.
We are great believers in helping our clients grow and prosper as...
Regulation: ASIC, FCAUSGFX information
ProfitiX is a financial services and brokerage company providing top-quality trading conditions and services, with ultra-fast execution on the MetaTrader5 platform, fund security, and a wide-ranging choice of trading instruments.
We offer high...
Regulation: ProfitiX information