This blog is to help new traders with the question of how to select a Forex broker.
Confused retail traders, who want to know how to select a Forex broker, send a lot of emails to our support team. So I will make specific recommendations and talk about the brokers that I have traded money with in the past.
The other goal of this post is to help you understand all of the elements that you should consider when you select a Forex broker.
Finding a reliable broker is a crucial part of building up your trading business and making a sustainable profit.
Using the wrong broker could result in serious costs and financial losses.
Fortunately, there are a few very simple steps you can take to ensure that you use a credible broker.
This will give you a high probability of protecting your money and building a sustainable trading business.
My career as a professional trader forges my own experience. Because I had fairly large sums under management, brokers would naturally fight for our business.
I have traded with many brokers and the main experience I have had is that they all tend to be about the same.
As long as you make sure that you select a Forex broker who has credibility, you shouldn’t have a problem.
How to select a Forex broker
Are your brokers regulated? This is the first and most important question.
Regulation is very important because it ensures that the broker adheres to very specific rules. Its job is to protect retail individuals from deception or misguidance.
One important point to highlight is that the effectiveness of regulation depends heavily on the body regulating it.
This means that not all regulation is equal. In fact, some regulators are as bad as no regulator at all.
The best regulators are the ones that make it difficult for brokers to begin operating in the first place.
This ensures that they have to complete all of the checks and have everything they need in place.
Generally, this will deter less reputable brokers and they will access regulation in less respected jurisdictions.
The jurisdictions that I personally consider reputable include the UK, US, EU and Switzerland. I refer to these as ‘headline jurisdictions’ as they are the most advanced and secure.
Anywhere else is either much less developed or has had issues with protecting retail traders from unscrupulous brokers. This includes places that may seem solid, such as New Zealand and Cyprus.
Being in the UK myself I have always used FCA regulated brokers because of the safeguards they have in place.
These safeguards came to the rescue of a lot of traders in 2015 when several regulated brokers collapsed during the SNB crisis.
All UK based accounts were protected from negative balances and losing their entire capital.
I have also used brokers based in Switzerland to good effect.
Other features to look out for
Another important feature is the customer support system that the broker has in place. This should be responsive and helpful.
Checking for a good support team will save a lot of frustration and concern later on.
Finally, a good broker will have a solid base of independent reviews online.
It is important to get a wide range of views from people that have actively traded with them before.
I would reasonably expect a good broker to maintain a rating of around 3 stars or above. This is a good sign when the volume of reviews is very high.
Reading up and identifying any common issues is the most important part for you.
Your ideal scenario is to find a regulated broker in a headline jurisdiction. They should have a responsive support team and a collection of reasonable online reviews.
While there’s no guarantee of success, this combination gives you the highest possible chance of finding it.
Brokers I have traded with
I have traded with many brokers and have never had a bad experience with trading and withdrawing money.
Despite this, I would only recommend a tiny fraction of them.
The reason for those recommendations is usually on something very specific that makes them stand out among the crowd.
The full list of brokers I have personally used include, ODL Securities, CHF Markets, ACM Markets, Hantec Markets, Valbury Capital, Dukascopy Bank, MIG Bank, Aura FX, Axi Trader, SVS Securities and CFH clearing.
Some of these brokers are more professional in their outlook than others but all generally served me well during my time there.
In 2016 I briefly recommended Axi Trader exclusively.
This was because I’d traded there myself, liked them and actually had a good relationship with the people behind it (In London).
Looking back, I have to admit that this was a mistake.
There were no specific issues but it just didn’t feel right to recommend one broker and receive commissions for it.
Credibility diminishes with payment. This made the recommendation invalid in my view.
Because of this, I stopped recommending them at the end of 2016.
I will simply share my own experience and recommendations based on my personal preferences.
Of course, we do not have any agreements in place with any of the highlighted brokers below:
Dukascopy are very cool because you can actually have a bank account with them too. They are one of the innovators of true ECN technology. They have been around for a long time, have a solid reputation and are based in a headline jurisdiction.
The main reason I would recommend them is because their platform is extremely easy to use and their execution is very good. Their customer service team is decent but were a little slow at responding to issues that I had. Despite this, I always felt that my account was secure and I enjoyed using their platform.
Regulated by the FCA, SVS Securities are a London based, fully-fledged brokerage house and asset management firm. They were established in 2003 and are a member of the London Stock Exchange.
The main reason I would recommend them is because their FX team is very responsive. These are most suitable for new traders with smaller accounts.
CFH are based in London and regulated by the FCA. Professional traders tend to use these – their minimum account size is $50,000.
Their platform is fantastic! Their execution is also top-notch. This is where I was trading when I first started to trade large sizes ($10 million on each position).
There was, of course, some slippage, but everything always worked well and I felt happy.
Hopefully this information will help you to select a Forex broker. If you have any question then please post them in the comments below, as I reply to each one!
You can also meet me and follow our free weekly analysis inside our Facebook group.
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