When you Need Some Help Finding the Best Forex Brokers, Start by Reading Our Forex Brokers Reviews.
When it comes to Forex trading, whether you’re a complete novice or a trader with some experience under your belt, an important factor to help you achieve success is finding the best possible Forex broker. Even if you’ve got the potential to become the next George Soros, you’re not going to get very far without the right kind of Forex broker by your side. So what should you be looking for, and what is the best way to find it? A great place to start is obviously right here, as we’re going to be sharing our own Forex broker reviews. We’ll also endeavour to provide you with some useful Forex broker comparisons, and maybe even provide a list of top-ranking Forex brokers. But not only that – we’ll give you some helpful tips and advice on what you should be looking for, as well as some more general information about the world of trading Forex. And in case you’re a little sceptical about the value and fairness of what you’re reading, we’ll explain exactly what we look for when we review a broker.
First, we’ll take a look at some important qualities t hat in our eyes will make a Forex broker great…
Top qualities of a good Forex broker
Knowing what you should be looking for in a top Forex broker is a big part of the battle, and will ensure you’re looking in the right direction. Having an understanding of the qualities that make a Forex broker stand out from the crowd will assist you in finding one that is efficient and effective for you and your style of trading. Some of the qualities we’ll be discussing will also be those that we look for when writing our honest Forex broker reviews.
With the introduction of online Forex trading, it is no longer necessary to choose a Forex broker that operates in your own country of residence. The world is now your oyster, and you can pick a Forex broker from anywhere in the world. However, there is one vital quality you should always look for in the beginning, and that’s whether the Forex brokers you’re considering are regulated and licensed by a recognised regulatory body. This is always the first check we make, and that doesn’t mean taking what is written on the best Forex sites as the truth and nothing but the truth. If a broker claims to be licensed and regulated by a particular body, we will do our very best to check that this is true. So what else should you be looking for, and what are the qualities we consider important?
- A good choice of accounts – The bigger the choice of accounts the better, at least in our book. A broker with a good variety of account types will be able to cater to a range of traders’ needs, abilities, aspirations, and bank balances. This is vital when looking for a top Forex broker.
- Provision of a demo account – Demo accounts are the perfect way for new clients to get a real feel for a broker and their trading platform, and to find their way around the trading process. If there isn’t the option of a demo account it is always going to affect our rating. As long as a broker offers this option we will consider it one of the better Forex brokers, and if the demo account has no time limit, then even better.
- A wide variety of tradeable instruments – Offering clients a wide range of assets for trading gives them more freedom, and will also serve to open up more trading opportunities. If you only want to trade foreign currencies you should be looking for a broker that offers not just the major currency pairs, but minor pairs and even a few exotics. If you want to diversify even further, look for one that offers precious metals, commodities, indices, and more.
- Low spreads – Some of you may be wondering what a spread is, and we’ll give a more detailed explanation a little further down this page. For now you only need to understand that it is the difference between the bid price and the asking price of a currency pair, and it is by virtue of this difference that a large number of brokers make their money. If the spreads a broker is offering are high, it should definitely be a reason to think twice about choosing that particular FX broker.
- Reliability – The best Forex brokers are those that can prove their reliability. Customer support should be available right when you need it. There should be no issues with downtime, or transactions that take forever to complete. We will give you our experiences with regard to reliability, but there is nothing that will compare to your own first-hand experience. This is where a demo account comes into its own, as it provides the perfect opportunity for real experiences, without risking any real money.
- An efficient trading platform – The trading platform a broker chooses to use is a vital ingredient. After all, it is how they will manage their account, place orders, trade in the market, undertake technical analysis, and receive those all-important financial news feeds. The most popular trading platform to date is MetaTrader 4 (MT4), and if a broker is offering this as one of their options it is always going to be considered one of the best Forex sites. However, there is still plenty of benefit to be had from other trading platforms, and we will always try and evaluate them as best we can. As we have mentioned before, a demo account is a great way to try things for free, and this includes the efficiency and user-friendly nature of a Forex broker’s own trading platform.
- Customer service available 24 hours a day – The world of Forex only ever rests during the weekend. For 24 hours a day from Monday to Friday, the Forex market is open somewhere in the world. The trading week starts on a Sunday night (when the Australian exchange market opens on its Monday morning), right through to Friday evening in the USA. It is therefore vital that anyone providing a service to investors in the Forex market is available to answer questions and deal with problems 24 hours a day. You might decide to trade during the early hours of the morning, so you want a broker who is going to be awake too.
- Payment procedures – You should look for an FX broker that offers a wide range of payment options and promises quick processing of payments, and also check whether any extra charges are made.
- Availability of educational material – Not everyone reading our reviews is going to be an expert, or indeed have even a modicum of experience. This is one reason we always take into consideration the training and educational material available, and that goes for more complex trading subjects as well as the basics. A broker who cares about educating their clients is going to be high up in our top Forex brokers list. The list we have given is in no way comprehensive, but should give you a good idea of the kind of qualities you should be looking for when picking the best FX broker. Some other features to consider include the following:
- A good variety of trading tools
- Minimum deposit requirements
- Bonuses and promotions
- Minimum lot sizes
- Good financial backing
- Transparency of terms and conditions
- Only by taking all the aforementioned aspects into consideration can you be sure you’re onto a winner. You may already be thinking that finding the best Forex broker is a mammoth task, but don’t worry because that’s the main reason we’re here – and the main reason there are so many other Forex broker comparison sites, Forex broker lists, and Forex broker reviews. Educating prospective Forex traders, and keeping those already involved as informed and up to date as possible, are our main aims. And we’ve got to be honest here – our aim is also to introduce you to new brokers and bring you into the exciting world of Forex trading, but to do it in a transparent, honest and fair way, and give you all the information you need in one convenient place, so that you can make an informed decision. Now we’ve given you a basic introduction to the qualities to look for in the top Forex brokers, let’s spend some time looking at some of these all-important characteristics in more detail…
How important is it for a Forex broker to be regulated?
When researching for our latest Forex broker review, the first detail we always check is whether the broker is licensed and regulated by a particular regulatory body. Most reputable online Forex trading brokers will submit to and comply with the regulatory agency in their own country.There are also some that will also register with a number of others. That is all well and good, we hear some of you say, but is it really important to choose a broker that is licensed and regulated?
The foreign exchange market is one of the world’s biggest financial markets, with an average daily turnover of more than $4 trillion. There is no centralised agency that controls the market as a whole. Instead, it is left to various government and independent agencies to supervise and watch over the market, as well as granting licences to those who operate and offer their services to traders. There are a number of advantages to choosing a regulated Forex broker, including the following:
- A regulated broker will follow industry-standard regulations, promising increased safety, reliability and security.
- A regulated broker is far less likely to use unethical business practices to increase their profits.
- Regulated brokers are subject to regular audits, reviews, and evaluations which encourage them to keep within the standards.
- A regulated broker has to keep sufficient funds to ensure they can execute and complete contracts. These funds should also be segregated, and not used to clear any of their own debts.
There are a number of regulatory bodies, and some are more recognised than others. For example, the FCA (Financial Conduct Authority) is the regulatory body for the UK, CySEC is the same for Cyprus, and in the USA the Securities and Exchange Commission (SEC) is responsible for financial regulation. There are also professional and governmental bodies and legal frameworks such as MiFID (the Markets in Financial Instruments Directive), which is a European Union law providing harmonised regulation across member states of the European Economic Area relating to investment services.
When we look at various online trading sites we will always pay close attention to the name of the financial regulator, and check that the licence is current and up to date. If this information is not readily available we will contact the individual broker and ask about their regulation, in order to keep our reviews accurate, and to save you the trouble of finding out for yourself.
Account types vary considerably between brokers.
The number and variety of accounts varies considerably. Some Forex brokers only offer one type of account, and some offer more than a handful. One of the most important accounts for us when writing our Forex broker reviews is the provision of a demo account, as this is a great way to practise trading without risking any real cash. A demo account also gives new traders the opportunity to try a broker out for size. Reading reviews is a great way to start the process of picking a broker, but no amount of words will be a substitute for real-life experiences.
|Free VPS Brokers||Segregated Accounts||Swap Free Accounts||MAM, PAMM, LAMM|
|IRA Accounts Brokers||Social Trading Networks||ActTrader Forex Brokers||Ctrader Forex Brokers|
|Zulutrade Forex Brokers||Fxstat Forex Brokers||Mirrortrader Forex Brokers|
If you’re a beginner to the world of Forex trading, or your investment capital is limited, you should look for a broker that offers mini- or micro-accounts, as they usually come with a low minimum deposit. More experienced traders should look for accounts with a slightly larger deposit requirement. For investors who have access to larger amounts of capital, a VIP, premium or professional account is probably the best option. It’s not just the initial deposits that vary; each account type will have its own leverage, spreads, minimum and maximum order sizes, and many other additional benefits. We will always give you as much information as possible in order to help you find a reputable broker with the best deal for each of you.
Do you want to trade just currency pairs, or are you looking for more tradeable assets?
Once upon a time, Forex brokers would only offer foreign currency pairs for trading. Nowadays, however, there has been an explosion in the number of tradeable instruments available for the average trader. Commodities, indices, binary options, CFDs, bonds, precious metals, and many other types of assets can be traded online, along with foreign currency pairs. It really depends on what you are looking for, as to whether you pick a broker who concentrates on one or more of these different assets. As a rule, though, the bigger brokerage firms offer a wider choice of products for trading.
|XM||CYSEC||WebTrader, MetaTrader 4, Mobile||256bit||Daily webinars in 14 languages 5 days a week, presented by 20 highly skilled instructors.||10/10|
|HYCM||FSA||PrimeTrader, MetaTrader 4, Mobile||256bit||Trading tools, beginners’ course, tutorials, trading strategies and ebooks.||10/10|
|Plus500||FCA||WebTrader, Mobile||256bit||Demo account||9/10|
|Avatrade||MIFID||AvaTrader, MetaTrader 4, Mobile||256bit||Webinars, video tutorials, ebook and glossary.||9/10|
|FBS||IFSC||WebTrader, MetaTrader 4, Mobile||256 bit||Seminars||9/10|
|CM Trading||FSP||WebTrader, MetaTrader 4, Mobile||256 bit||Videos, technical analysis, fundamental analysis, webinars, Guardian Angel, and expert advisers.||8/10|
How much will your trading cost? Spreads, commissions, and fees
Obviously, Forex brokers don’t offer their services for free. There are a number of different ways a broker makes their money, and the one that usually features top of their pricing is spreads. Some brokers make a big thing about advertising how low their spreads are, and if there is no mention on their site of the how much you might have to pay for trading, it should raise a big red flag.
What is a spread, and what should you be looking for?
Spreads are the primary cost involved in Forex trading. Basically, it refers to the price difference between purchasing and selling a currency pair. For those more familiar with trading it is also known as the bid:ask spread. Spreads are expressed in pips, so perhaps we should start out with a simple explanation of pips. You may have heard traders talk about 300 pips of profit, or found it when reading about Forex trading. Such an expression makes a pip sound like some kind of currency, but it is really far more complex than that. A pip is a measurement used to represent a change in the value of a currency. In fact, it is the smallest change possible, and usually represents a 0.0001 price change. Imagine, for example, the EUR/GBP currency pair changes from 0.8447 to 0.8448, this movement will be 1 pip. However, as with many things, there is an exception to this rule. If a currency has a low unit value, it will usually only be quoted to 2 decimal places, as opposed to the 4 decimal places used in our example. A pip, in this case, is 0.01 rather than 0.0001. If we take Japanese yen as an example, and the currency pair USD/JPY, the pair may increase in value from 104.15 to 104.16, which will be expressed as a 1 pip change. Another thing to remember when considering pips is that not all pips are equal. If the denominating currency in two pairs is the same there is no problem. The difference comes when it is different, in that a pip doesn’t have the same value.
Let’s now look at the relationship between pips and spreads. The price of any currency pair is always quoted as two prices. The first price is always the bid price, or how much you can expect to receive for a currency pair; while the second price is always the ask price, or how much a seller is asking. There is usually a difference between the two, and this is the spread, which will be expressed in terms of pips.
Orders to buy will be executed at a higher ask price, while orders to sell will be executed at a lower bid price. What does that mean if you’re a trader? Imagine you buy a currency a currency pair and then sell immediately. You will make a loss equal to the amount of the spread. It is, therefore, usual for traders to look for a broker offering low spreads. This is because the spread is similar to a tax levied on each transaction. The money that a trader loses on the spread goes into the pocket of the broker or market maker, and this is one of the reasons why many brokers have no need to charge commission: Their profit is already built into every trade.
What to look for in a trading platform
A trading platform acts as a bridge between broker and trader. It provides a trader with some very useful information such as charts and quotes. It is also the vehicle for entering orders for the broker to execute. Brokers offer a number of different alternatives, and the trading platform software can either be installed on a trader’s computer or be used via Windows, Mac, or Linux operating systems. There are also a number of brokers who offer Web-based platforms, and an increasing number who offer mobile-friendly alternatives. There is an advantage to mobile and Web-based platforms, in that they can be used anywhere there is Internet access. It is usual for brokers to offer trading platforms for free, but traders may be able to purchase platforms with greater functionality for a fee.
Some of the top-ranking Forex brokers provide their own proprietary trading platform for traders to use when placing orders, and to keep track of the markets. A large number of brokers also support third-party independent trading platforms, such as MetaTrader 4. Now you understand what a trading platform is, let’s consider some of the qualities to look for:
- Efficient and swift – One of the most important qualities of a trading platform is its ability to respond quickly and efficiently. The conditions in any foreign currency market can change in the blink of an eye, and as a trader, you want to be able to respond immediately. It would also be an advantage to be able to place more than one order at a time, so it’s vital the trading platform used can handle that. In addition, the trades you choose to enter should be implemented smoothly, without having to go through a number of procedures. One-click execution is the best solution.
- Secure and safe – A good trading platform should be safe and secure. After all, it will be dealing with your hard-earned cash, as well as holding all your personal and financial information. You need to be confident that no unauthorised parties can get hold of this information and use it for their own profit. There should be safety measures in place that are immediately noticeable as soon as you log in.
- Accurate and responsive quotes – All Forex trading platforms will be able to provide Forex quotes, but the best one is one that provides the most accurate quotes. In this way, you will have enough information to decide on the best way to proceed. Don’t worry too much about a trading platform that gives re-quotes. It’s far more important to see how much your currency is actually trading.
- Lots of added extras – It’s all well and good to have a well-functioning trading platform, but it will be even better to have one with plenty of helpful tools and enhancements. Extra tools will ensure that you’re ahead of the game. Some of the tools it can be useful to have access to include indicators, charts and news outlets. Indicators and charts will allow you to watch trends and movements, and news outlets can keep you up to date with the latest events.
Finally, one last quality that could be very important is that the platform is mobile-friendly. How many of you reading this are looking to trade when out on the road, sat on the bus, relaxing on the beach, or just about anywhere apart from your own home? It’s quite likely a number of you are looking to participate in Forex trading using a mobile device, and therefore it’s vital that you’re able to do all you need to do on your smartphone, tablet or any other kind of mobile device.
Are you planning to take advantage of automated trading systems?
Before we move on to discuss one of the other vital qualities found in the best Forex brokers, we’ll spend a few moments looking at a relative newcomer to the world of Forex trading. Automated trading wasn’t possible when Forex trading first started, but is becoming a very popular way for traders to trade. In fact, for many modern traders, it has become an essential part of their arsenal. So what is automated Forex? Basically, it is a computer program that does all the hard work for you, leaving you to get on with the rest of your day, without having to worry about watching the ever-changing markets and evaluating whether to buy or sell a particular currency pair. An automated Forex program will advise a trader to make trading decisions based on a set of signals that have been set by the program designer. It can also place trades orders on behalf of a trader, so that they never have to miss an opportunity.
This type of trading software is also known as an Expert Advisor or EA, and if you’re planning to adopt this form of trading, or at the very least incorporate it into your strategy, you need to be sure the trading platform a broker is using supports such a method of trading. Forex trading robots also fall into this category, and we’ll be discussing them further on another page.
We’ve already mentioned the MetaTrader 4 trading platform, and this is actually one of the most popular currently available. A large percentage of the brokers we review will be offering it as one of their platform options. So let’s take a look at what has made MT4 the preferred choice of many brokers…
What is it that has made MetaTrader 4 the platform of choice?
According to some of the Forex articles we’ve been reading, as many as 95% of Forex brokers currently offer this trading platform. We will always make a point of mentioning in our reviews whether a broker has chosen this platform, but we might be better off only mentioning when they haven’t, and instead have made the decision to offer something different. Nevertheless, offering MT4 is still an important quality to look out for, and we’re about to explain why this is so.
MetaTrader 4 didn’t immediately rise to the height of popularity it enjoys today. It began its journey upwards in 2000 when it was just a simple charting package. Over the following years, it underwent several changes until it eventually emerged as the complete trading platform package it is today. In fact, there aren’t many traders who haven’t heard of MT4.
MT4 actually gained a significant advantage, as it was one of the first made generally available when online retail trading started to become popular. Other features that have made MT4 the most popular trading platform include the following:
- It’s free – There are some worthy contenders for the title of the best trading platform, but not many of them are free. And let’s face it, we all love something much more when it hasn’t cost a dime. MT4 is completely free, which is always going to make it preferable to other platforms that charge a fee. After all, the savings you make by choosing a free platform can be added to your trading account.
- It’s got lots of additional features – The huge number of extra features was possibly one of the main reasons MT4 became so popular when it was first introduced in 2005. These included multiple charts set-up, a navigator window, an indicators window, the Pepperstone market terminal, the market watch window, more than 80 pre-installed indicators, and the ability to support automated trading. Most of these features are now pretty much standard whatever the trading platform, but way back then the were revolutionary, and certainly lifted MT4 way above the competition. Even more amazing was the fact that MetaTrader didn’t stop there, and has been adding features on a regular basis. These include a signals section, a news section, one-click trading, and a number of additional trading instruments. Some of our top-rated brokers like XM or Trade.com offer MT4 as a trading platform too.
- It’s user-friendly – A simple trading platform is vital. The main aim for any trader is to beat the market and make a profit, and trying to figure out how to use a trading platform is only going to delay matters. MT4 is full of useful indicators and features, but is really easy to navigate. Symbols and rates are on the left, while charts are on the right, and indicators and other features are at the top of the platform window. Being able to trade with just one click, and the ease with which MT4 can be customised, has made trading even easier.
- MQL4 programming language – MetaTrader 4 uses a programming language called MQL4, which makes things really easy for traders, programmers, and other third parties to create and use EA indicators and trading robots. MetaQuotes Corporation provides their own indicators and EAs, but there are hundreds, if not thousands, of third-party robots and indicators that have been created especially for MT4. Traders have also been able to adapt the platform to include certain special functions, such as the ability to take screenshots of a small part of a chart.
- Convenience – Convenience is another vital element, and MT4 has it in truckloads. It is far more advanced than previous versions, and certainly far superior to the competition. It is able to support tens of thousands of trades simultaneously. MT4 requires very few resources in order to function, and can even operate with low Internet bandwidths. Communication between client and broker is quick and hassle-free, via the mailbox section in the client terminal, and MT4 security is almost perfect.
- Fully customisable – Everything in MT4 can be customised, which is a very important feature. It saves traders precious time opening all charts and placing indicators they prefer using. The windows can be arranged according to preferences, the appearance of the charts can be changed, external and internal indicators can be added with little bother, symbols can be put in the order you prefer, and it’s really simple to switch from one account to another. All changes can be saved so the next time the platform is opened it is just as you left it.
- Its popularity – This may sound like an odd feature to include in the list, but the more popular a product becomes, the easier it is for it to attract more new customers. Just type “trading platform” into our search bar and MT4 will feature in nearly every hit. There are thousands of articles you can read about this platform, and those already using MT4 are only going to spread the word further.
Now that we’ve covered the important aspects of trading platforms, it’s time to move onto another really important feature to consider when picking the best Forex broker, and that’s the quality of customer service provided.
|Hedging Forex Brokers||Forex Brokers for Scalping||MT4 Forex Brokers||MT4 ECN Forex Brokers|
|MT5 Forex Brokers||STP Forex Brokers||DMA/STP Forex Brokers||Interest of Margin|
Customer service should be available 24 hours a day.
Forex trading takes place somewhere in the world 24 hours a day, from Monday to Friday. Or if you want to look at it in another way, from Sunday evening to Friday evening. And let’s face it, we all want to be treated well, whether we’re buying our weekly groceries, looking for a new mobile phone deal, complaining about our utility bill, or more importantly in this case, communicating with our chosen Forex broker. Having a top-notch level of customer service is only going to make your Forex trading a more enjoyable experience, and it could also have a significant impact on your trading success. Let’s give you an example. Imagine you are looking at your trading platform and everything has frozen. Not an unusual occurrence in today’s technological world. It’s not responding to your requests, or there’s some other technical problem. Your only course of action is to get in touch with customer support. What will happen if you can’t get in touch with anyone to try and resolve the problem? You stand a big risk of losing out on the deal, and thereby suffering the possibility of major financial losses. Not an ideal scenario for anyone, as you can well imagine. To save yourself from a similar fate, we’d advise you to look for an online Forex trading broker with the highest level of customer support.
There are a couple of really easy ways to find out about a broker’s customer service. The first is to read our Forex brokers reviews, and the second is to open an account. It doesn’t have to be a real money account; a demo account will also provide ample opportunity to test the customer service waters. While you’re enjoying the features of the demo account, check whether the broker has a live chat option, and start up a conversation. Take the opportunity to give them a call via their telephone number. Write them a few emails and see how long it takes for them to respond. These are some of the ways you can check out the quality of a Forex broker’s customer service. Of course, we will also have followed this advice, but you should appreciate that not everyone’s experiences are going to be the same.
|Broker||Phone||Live Chat||Response Time||Other||Rating|
|XM||+357 25029933||24/5||Within 8 hours||Fax||10/10|
|Plus500||no||24/7||1–8 hours||Contact form||9/10|
|Avatrade||+1-888-541-3720||24/5||1–8 hours||Contact form, Fax||9/10|
|FBS||800003192||24/5||Up to 8 hours||Callback, Ask a question||9/10|
|CM Trading||+44 203 318 2176||24/5||Up to 8 hours||Contact form, Fax||8/10|
Initial deposit requirements and methods of payment
We’ve already mentioned earlier that brokers come in all shapes and sizes, each with their own set of requirements and features. One of the main variables when performing a comparison of Forex brokers is the initial deposit requirement. Some brokers will make it a few thousand dollars, and some will offer a minimum deposit of just 1 dollar. Of course, it will also depend on the type of account you choose to open. We will always give you as many details as regards deposit requirements, as it is going to make a difference to the broker you choose.
Are you looking for a broker with a low initial deposit requirement, as you’d prefer to start your trading career by risking as small an amount as possible? In this case, you should be looking for a Forex trading broker asking for a low initial deposit. If, on the other hand, you can honestly afford to risk losing a larger amount of money, then you’re going to have more options. However, we have to say that while choosing a broker based on deposit requirements may have its merits, particularly if your funds are limited, on the whole, it is really not a useful criterion to consider (although it is always useful to know).
|Paypal Forex Brokers||Skrill Forex Brokers||Webmoney Forex Brokers||Neteller Forex Brokers|
|Wester Union Forex Brokers||Bitcoin Forex Brokers|
Some of the best Forex brokers choose to keep the initial deposit requirement relatively high, as it ensures that only the most serious clients sign up for an account. Also, Forex markets can be extremely volatile, which means that those traders with small amounts of capital are going to be quickly wiped out, even if the fluctuations are minor. We do however, appreciate that not every trader can risk huge amounts of money, and we would always advise new traders to risk only what they can realistically afford to lose. If you can only afford to risk $10 or $15, you’d be much better off starting your trading experience with a demo account.
Another feature we should mention here is the ease with which you can withdraw your earnings. There is little point in making huge profits if you have little chance of withdrawing them. There is no justification or excuse for delays when requesting withdrawal of funds; which leads us nicely on to the subject of terms and conditions, which is one aspect of Forex trading that often trips newcomers up.
|Broker||Credit Cards||Debit Cards||PayPal||Skrill||Neteller||Bitcoin||Paysafecard||Bank Transfer||Withdrawal time||Fees||Rating|
|XM||1–5 days||No fees||10/10|
|HYCM||1–7 days||No fees||10/10|
|Plus500||1–5 days||No fees||9/10|
|Avatrade||2–5 days||No fees||9/10|
|FBS||1–2 days||No fees||9/10|
|CM Trading||1–7 days||No fees||8/10|
- Fastest withdrawals
- Many payment options
- No fees
Always take the time to read and understand a broker’s terms and conditions.
Many experts say that the devil is in the details, and this definitely applies to Forex trading. Spend some time reading customer reviews and you will learn of many traders who have come unstuck because they didn’t take the time to read and understand the terms and conditions. All the best Forex sites have pages dedicated to this important aspect of trading, and will always advise their clients to read them. But how many actually do? Not as many as should, that’s for certain.
One common feature that is used by many brokers to attract new clients is the advertising of Forex bonuses. Some of them sound really amazing, and really too good to miss; but should a trader really take the bonuses without reading the small print that is always attached to such deals?
Take the bonus, or not? The million dollar question
Type “Forex bonus” into any search bar and you’ll get millions of hits. Being given money for nothing really seems too good an opportunity to miss, and free money is only going to be a big boost to your trading career, isn’t it? We will always feature any promotions and bonuses as part of any review we write, but we would always advise caution, and there are a number of reasons why:
You may experience problems withdrawing the bonus.
A problem that is often encountered relates to making a withdrawal once a bonus has been given. Let’s imagine you took advantage of a bonus of $200 after making your initial deposit. This may have increased your trading capital, but you wouldn’t be able to withdraw that amount. You might want to make a withdrawal to cover an emergency, but it is very likely the broker won’t let you do it. It is in their best interests to keep your capital in your account. Even if you want to switch brokers, you still won’t be able to take your money out. The only way to withdraw the bonus is by meeting the broker’s trading requirements, which can sometimes be very hefty. The bonus terms will vary from broker to broker, but on the whole they will be considerable. If the broker does allow you to make a withdrawal, it may mean you lose the accumulated bonus, or that it will be calculated on a pro-rata basis.
Bonuses are often aimed at new traders, or those with minimal capital,
This means that even allowing for leverage, it will take a long time for this type of trader to meet the trading requirements. It could take years, and then there is the risk of not meeting the time deadline. If an account is opened with a larger deposit, there is a better chance of meeting the requirements, and it won’t take nearly as long.
Many of the best brokers have no need to offer outrageous bonuses.
We’ve discovered in the course of writing our broker reviews that many of the better brokers have no need to offer unbelievable bonuses and promotions. Their services speak for themselves, and reputation and word of mouth speak volumes. They attract new clients by offering tighter spreads, rebates on commissions, or commission-free trades to their active traders, and very rarely do you see free money plastered across the best Forex sites.
We’re not saying that all Forex brokers who offer extraordinary bonuses are bad ones. On the contrary – we’re just pointing out the problems that can sometimes occur, and hopefully, you’ll take it on board and exercise some caution. Most definitely you should spend some time reading the terms and conditions that are attached to said offers. And a final word on the subject: There is no such thing as free money. There is always going to be a catch, and if you don’t meet the terms and conditions you run the risk of not just having the bonus taken away, but of having your account frozen and never getting your money out of your account.
Now we’ve spent some time looking at the features to consider when choosing your Forex broker, and the aspects we always research when writing our Forex broker reviews, it’s time to look at the different brokers there are to choose from…
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There is more than one type of Forex broker to choose from.
We’ve already mentioned that brokers come in all shapes and sizes, but the choice is a little more limited than that. The features you should be looking for are relevant whatever type you choose. The choice of broker now depends on the type of trading you want to participate in and whether there are any special features you would prefer to take advantage of. So here are your choices:
- Dealing desk broker (DD) – This type of broker is also known as a market maker. They often offer fixed spreads, which may be above or below the real market price. Market makers sometimes receive a lot of bad press, and this is because they are always the counterparty in any transaction. The trader doesn’t actually deal with the liquidity provider, but with the market maker instead. This has the possibility of leading to a conflict of interest, which is where this type of broker could be accused of underhanded dealing. This doesn’t apply to all dealing desk brokers, however, but you should bear it in mind.
- No dealing desk broker (NDD) – A no-dealing-desk broker enables direct access to the interbank market. They can be either an STP or an ECN broker, or a combination of both. A genuine no-dealing-desk broker never requotes prices, which allows for unrestricted trading during economic announcements. Often the spreads offered will be lower, but they aren’t usually fixed. This does mean that they can increase significantly during major economic announcements. A no-dealing-desk broker makes their money either by charging a commission on every trade or by increasing the spread.
- Straight through processing broker (STP) – With this type of broker trading transactions are fully computerised, which means they are processed immediately on the interbank market, and there is no intervention from a broker.
- Electronic communication network broker (ECN) – An ECN broker uses real-time order book information that features orders that have been processed and prices that were offered by banks on the interbank market. This leads to greater transparency because all the information is provided to the market participants. ECN brokers make their money by charging a commission based on trading volume. All transactions are directly processed through the interbank market.
- Multilateral trading facilities (MTF) – This is a form of exchange rather than a broker, and it allows buyers and sellers to come together with non-discretionary rules. It is not a regulated exchange, but it does operate under the same rules. The rules are transparent and ensure that the trading system is fair. Brokers can guarantee price efficiency along with the clearing of transactions. Compared with a traditional exchange, an MTF facility allows for greater discretion, much faster execution speed, and much lower brokerage fees.
We’ll finish up with a few tips and hints on how to pick the best broker, and how to avoid those well-publicised scams.
How to pick the best Forex broker for your needs
Let’s start with a few simple questions you should ask the broker before you open an account. You should be able to find the answers by reading the relevant broker review here on our site. If, however, you’ve chosen a broker we haven’t yet featured, don’t be afraid to get in touch with the broker directly, and fire off these few questions:
- Are you licensed and regulated, and if so, with what regulatory body?
- Do you offer a range of currency pairs, and if so, which ones?
- Are client deposits segregated? In other words, are they lodged separately from your operational capital?
- Are you an ECN broker, or is there a dealing desk?
- When is your customer service available, and how do I get in touch?
- Do you offer MT4, or is there an alternative? Can I trade using a mobile device?
- What is the process for making a deposit, and how do I make a withdrawal?
- Where can I find the terms and conditions that relate to any bonuses?
Once you have the answers to these questions, and armed with some of the features we’ve suggested you should be looking for, you should be well on the way to finding the right broker, and before you know it you’ll be starting to trade in foreign currencies.
We appreciate there is a lot to think about when trying to choose a Forex broker; but with our help, we’re sure there will be no problem narrowing down the field. A big part of the decision will be personal preference, and will also depend on your own trading needs and requirements. You might want to trade major currency pairs, or you might prefer to trade more exotics. You may find you prefer to use the MT5 trading platform rather than MT4. Whatever your preferences, as long as you pay attention to the important issues such as regulation you are sure to find the right broker to suit you.
How to avoid being caught out by a scam broker
As final food for thought, we’ll take a quick look at some of the things you can do to avoid being caught out by a scam broker. There are thousands of brokers to choose from, and we’d be stupid to tell you they are all good. Forex trading has taken off in a big way, and as with any new form of investment, there are always going to be a selection of people whose only aim is to take advantage of the uneducated. Forex trading has the potential to earn you lots of money, but it also has a far bigger potential to leave you with absolutely nothing. One of the best pieces of advice we can give is to only risk what you can truly afford to lose. While mortgaging your home on what seems like a deal that can never lose may be very appealing, picture yourself in a few months time when the deal falls through and you and your family have nowhere to live.
So what can you do to avoid being taken in by a broker who is everything but genuine? First of all, we should point out that it is not just beginners who face the dilemma, but experienced traders can also fall foul of fraudulent brokers and scams. The good news is, though, that there aren’t that many out there, and the vast majority of brokers are fair, transparent and honest. Nevertheless, it always pays to do some homework and investigate a broker thoroughly before you throw them your hard-earned cash.
- Spend time reading FX broker reviews – And not just here on our site, but take a look at other review sites, Forex broker comparisons, and Forex brokers’ lists. Also, try and find some reviews written by real traders, as well as those written by companies and firms; but be aware that a number of customers only take the time to write a review when they have had their fingers burnt by a broker; and this is often the result of their own trading mistakes, rather than the fault of the broker. If you read enough, though, you should be able to get a more balanced view.
- Talk to other traders – Reading reviews can be very informative, but will never match the value of talking to real people. And this doesn’t always have to take place on a face-to-face basis. Many of the best Forex sites also have blogs and Forex forums. This is where traders exchange views and opinions, rather than just participating in live trading. Find some traders with similar values and preferences to your own, while carrying out some background checks on the brokers you are interested in. You will find that people are more objective when you talk to them directly, and you can always check out social media profiles, or the LinkedIn of some top brokers you know.
- Check out the validity of the broker’s regulation – If a broker has a licence and is regulated by a particular regulatory body, there should be no reason why it isn’t clearly stated on their website. If there is no mention of any kind of licence, this should immediately raise a red flag. However, a word of caution: There are a number of brokers, although it’s not many, who claim to be licensed and regulated, when in fact, it couldn’t be further from the truth. Don’t worry about checking it out, as it is very easy. We do it for all the brokers we review, but if you want to do it yourself, you just need to visit the relevant website of the regulatory body, and type in the name of the broker, or the company that is the owner of a particular trading name. There are a number of regulatory bodies that are well known, such as the FCA (Financial Conduct Authority) in the UK, CySEC in Cyprus, BaFIN in Germany, and a number of others. Forex regulators in countries like the UK, Switzerland, the US and Germany have some of the strictest standards. So, if the broker you are considering is licensed by one of these, then you have a much better chance of picking a broker who is reliable and trustworthy. A scam Forex broker is far more likely to be unregulated, or be licensed in a smaller, less well-regulated country.
- Always try before you buy – If you’re buying a new type of food, wouldn’t you want to try a little bit before you buy it? Why should choosing a broker be any different? Once you’ve compiled a list of possible contenders, take some time and open a demo account, so you can try each of them out before you invest real money. Do this for a few weeks, trading at different times of the day, during news events to find out whether different types of trading are allowed such as scalping and short-term trading. Have a go at making withdrawals and deposits to see how long it takes. Get in touch with the customer service departments to see how well they perform. Once you’ve done this your list should be much shorter, and you may even be left with only one. Once you’ve narrowed the field down to one or two, try trading using a live account, but make the initial deposit minimal before you decide to go all in.
- Last, but not least, trust your gut – If it doesn’t feel right, then skip the broker and move on to the next name on your list. Even if they are registered, and all the other features get the thumbs up, if you don’t feel comfortable trading with the broker it’s really not going to work in the long run. Does what they’re offering sound too good to be true? Remember there is very little in this world that is given away for nothing; there is nearly always a catch, or even two. With the world at your fingertips, via the World Wide Web, it is much easier to investigate any likely brokers and uncover whether they are scammers. If you fall foul of a scam broker you really only have yourself to blame. There are so many websites offering advice, and forums where traders can share their experiences, that you should never find yourself getting caught out.
At the end of the day, Forex trading is an adventure, and who are we to blame you for wanting to enjoy the ride? Just be sensible, take all the necessary precautions, and be wise in your investments, because it should be an enjoyable experience and not just a profitable one. Keep our site as one of your favourites, and we’ll keep you informed of all the latest Forex broker news, as well as bringing you lots of honest, reliable, trustworthy Forex broker reviews. We hope you’ve enjoyed reading what we’ve had to share so far, because there is lots more to come. Forex trading is an ever-changing form of investment, so it’s important to keep up with trends, take advantage of any new developments, and hopefully make a profit!