How to find a reliable Forex broker in 10 steps


Trading Forex is easy, yet complicated. Compared to 10 years ago, trading Forex is much more accessible and requires smaller investment sizes, making it suitable for more and more people.

Talking of suitability, the lower the deposits go, the more questions arise. As you get a common question in your mind, why does my broker make things look so easy.

In this review I will talk about how to find a reliable Forex broker in 10 easy steps:

1- Where is my broker incorporated?

Although trading Forex is accessible from anywhere we want, the location where our broker is incorporated tells much about our broker. As an example, if our broker is incorporated somewhere in Caribbean Islands and has no regulation, it is likely that your account is neither segregated nor insured.

2- How likely is it that I will have the advertised spreads?

It is becoming more and more trendy among brokers to publish “as low as” or “typical” spreads without revealing when or for how long these rates are available for traders. In fact, with many brokers a typical retail trader will never get these advertised spreads.

If you see your broker advertising spreads “as low as” 0.0 pips on EURUSD, you need to ask what does that “as low as” mean?! Do special conditions apply? Can they share the record of their average spreads for the last month to confirm their spreads? Or what are their conditions?

3- What are the “Special” conditions?

Like many things we see online and press that accept button, in Forex trading we also often do not read our brokers’ terms and conditions where there are always some nitty gritties mentioned.

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For example, there are many brokers imposing a minimum account opening balance for the trader to receive the advertised spreads. Or, they offer 50%, 100% bonus where everything seems so amazing until you notice that your broker will be sharing your profit 50/50.

The worst part is that, even in front of the regulator, in this case you have no right as you have accepted the broker’s T&Cs.

4- What are my trading costs?

Traders are a special type of breed. We believe in unicorns, holy grails and angels.

When I started trading for the first time, I used to think that the only cost I had was my spread and I am sure that many of the traders still don’t understand their costs properly.

Some Forex Brokers offer tight spread like 0.3 pips but then they make up their profits in other ways.

Your broker might start charging you illogical swaps, withdrawal fees and different types of fees. So you should make sure to understand all of the possible trading costs involved.

5- Do all traders get the same spread?

This is a common misperception. Traders would often be depositing $200 and expect to not pay transaction fees, receive free VPS and have 0.2 pips spread with no commission. All sounds good, right? My answer is not!

Every Forex Broker claims to have the smallest spreads and fastest execution. I am not saying they lie, but even so they won’t give the same opportunity for every trader. Many brokers will tailor their spreads based on customer trading account balance, trading volume, or other KPIs set by their management. Often larger and better-connected traders and institutions will receive a differentiated service. So are you even eligible for the “discounts”? Especially if you are a normal retail trader with a $500 deposit.

6- Does anyone other than my broker benefit from my trading activity?

Now, this subject is quite controversial.  IBs and Affiliates are common practices in Forex industry. As an example, at AtoZForex.com we have a policy of NOT BECOMING an IB nor an affiliate of any Broker, in order to keep the information provided unbiased.

But many people out there earn referral incomes from your operations, which means depending on the type of the agreement, brokers are likely to be paying either fixed one off fee or revenue share on your spread to the referral. The worst part is the GREED, many of these referrals will ask brokers to add a mark-up (increase your spread) in order to earn more commission from your operations.

The good thing is that you have the right to ask your question; if there is any referrer or if anyone other than your broker is benefiting on your trading volume.

7- What flexibility do I have?

Often brokers offer different types of accounts, of course the one that look better is quite often the bad one.

For example, one broker may offers three types of accounts:

  • Fixed spread for majors 1.5 pips, with $500 minimum deposit
  • Variable spreads starting 1.0 pips, with $2.500 minimum deposit
  • Pro account, with $5.000 minimum deposit

Of course, as a new trader you want to go for as low as possible and feel that fixed spread is the best. Yet, the reality is that with the fixed spread this broker will disable your account during the news time, making it hard for you to sustain your position.

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So, ask your questions in advance. What are the restrictions applied on my trading account?

8- Which regulator covers my account?

It is common among some brokers to incorporate their company in one country and open representative offices with multiple other regulations. Thus it is important for you as a trader to understand under which jurisdiction your account is being opened.

For example, if your broker is holding regulation from Mauritius and CySEC,  where you obviously want your account to be under the CySEC regulation instead that of the Mauritius, since your account becomes part of the MIFID regulatory framework.

9- Is my account segregated?

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// ]]>Almost every broker claims to have accounts segregated, but the reality is that many brokers don’t segregate funds!

Therefore, to safeguard yourself from any possible damage you should consider asking in black and white to your broker if your account is segregated.

10- Can I visit your office?

There are too many brokers claiming to be “international” or “global” with multiple offices all over the world, but once again the reality is that many of these brokers have nothing but a PO box in most of those countries.

Check your broker’s registration with AtoZForex directory, find in which countries they have offices, confirm these offices with the local regulatory listings and ask your broker for a visit. If they are a reliable broker, they will have no reason to say no.

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