How To Choose A Good Forex Broker?

A Forex broker is an intermediary between traders and the market. They give traders access to a platform that allows them to buy and sell currencies. Forex brokers mediate a large percentage of the transactions in the retail Forex market.

Traders carry out their trades through brokers, even though, in principle, they can go to any bank to buy foreign currencies. This is because banks make the whole process very cumbersome. Because of fierce competition in the market, brokers offer you rates very close to market prices or ‘spot rates’ as they’re called.


Now, what are the things to consider while choosing a broker? 



Forex is not as strictly regulated as other financial markets and rules change from country to country. Most developed countries, however, try to regulate forex brokers and have various regulatory authorities charged with overseeing how they operate. Brokers who have business in more than one country are often licensed by more than one regulator.

Regulators try to ensure that brokers are adequately capitalized in the event of trading losses. They require brokers to keep customers funds in secure and segregated accounts. They should maintain fair dealing practices so that trades will be executed at the prevailing market prices.

You should choose a regulated broker with a clean compliance record. A good broker will list the names of regulators they are licensed by. You could verify their registration numbers online with each regulator.



Spreads are a broker’s primary source of compensation. The tighter the spread, the less costly it is for traders to enter and exit a trade. Spreads can be ‘fixed’ or ‘floating’. Floating spreads vary depending on market conditions. Some brokers give you a choice but most will only offer either fixed or floating spreads. Brokers will also offer tighter spreads for accounts with higher deposit minimums.

There are two types of brokers based on how they execute your orders. Dealing desk brokers determine the rates available to their clients, so they typically provide fixed spreads. The other kind is STP/ECN brokers. STP brokers route your trade orders to the interbank market and add a few pips to the interbank rate as compensation. ECN brokers allow your orders to interact with other orders within an electronic trading network. They charge commissions instead of spreads. For example, they may charge you a certain amount per lot.

Trading costs are not limited to spreads and commissions. You may be charged additional fees for withdrawals, deposits, wire transfer, credit card, inactivity, and account closing. Consider all these factors before choosing your broker.



Brokers differ greatly with account options they provide such as minimum deposit amounts, account features and trading terms. An aspiring trader eager to start trading might not notice some of these details, but they are important. In countries where competition among brokers is high, you’ll get more favorable options.

Many brokers have a tiered account structure, usually based on deposit amount. Terms may improve for larger accounts. You may get favorable spreads, greater access to tools and analytics and personal account managers, for instance. Options with minimum lot size and maximum leverage also vary. High value accounts generally get more flexibility with these choices.



You interact with the market through your trading platform. Be careful to choose software that is user-friendly and powerful enough for your needs! Most brokers offer demo accounts so you can practice on their trading platforms and see how good they are before signing up for a real account.

Metatrader 4 is the leading platform for retail trading. Most brokers offer Metatrader, but some offer customized, more advanced versions to clients. Many brokers offer proprietary web-based platforms as well. There are also social trading platforms that enable traders to share strategies and copy good strategies.



Good customer support is especially important for beginners in forex trading. Good support makes it a lot easier to open an account, learn to use the trading software, and accelerate your learning. Most brokers offer round-the-clock phone support and live chat. Some offer only email support and live chat.

Some brokers provide the help of personal account managers to ensure you get the support you need. This service may not be available for all account types and the terms may vary from broker to broker.



Ultimately it’s you who should decide which broker to choose. If you have an expert trader to help you with most everything a beginner needs, good customer support might not be all that relevant, or a personal account manager, for instance. Likewise with account types, spreads and execution methods. Look for the right mix of all the factors important to you.

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *