The most important thing for a forex trader is broker security. There's no peace of mind when you feel that your forex broker is dishonest; you won't be able to trade logically because the results will not depend on you, no matter how good a trader you are. So choosing a forex broker that is licensed and registered makes a difference. Some of the most reliable financial regulation groups are FSA (UK), CFTC (US), FINMA (Switzerland) and BaFin (Germany).
Of course, you have to find a forex broker which suits your trading style. If you are a scalper or use a scalping strategy and your broker does not allow scalping or discourages playing with all sorts of tricks, you can't trade with them regardless of how reliable they are in other aspects. Every forex trader has his own trading style, so there's no single rule to follow. The only advice we can give is to try your strategy with them for a while and if their services match your need, go with them!
Trading platforms are also important. We used the Metatrader 4 or Metatrader 5 platforms at some point during our trading years and almost all forex brokers offer it. However, if you want more, there are plenty of brokers who offer their own trading platforms. Some of the platforms are confusing but some are surprisingly good. I won't mention them all though you should check out our new featured forex brokers list above and read about their trading platforms.
Costs are very important to anyone, as a result, spreads must be as small as possible in order for a forex broker to be considered a good, especially if you like to trade short term signals. In addition, there are other fees, such as deposit/withdrawal fees, dormant account charges, etc. Pay attention to dormant account penalties as well. Make sure to check all types of fees before opening an account with any broker.
A trader must also test the broker's customer support. Sometime, a small issue can turn into a big nightmare if the customer support is not helpful. Other features which may be appealing are bonuses, rebates, promotions, trainings and webinars. They're not extremely important, in my opinion, but might be very appealing to others. You should take them into account if they are important to you.
How to Avoid a Forex Scam
We all would like to get the best things in life, and with all the fancy platforms, websites, and other promotions it is easy to be lured into a scam. For this reason it's important to trust your intuition and common sense, particularly when choosing a forex broker. If a forex broker looks too good to be true, then it's likely that he's a scam. However, it is easy to misjudge, so it helps to talk to other people who have been in the forex industry when trying to pick a forex broker with which to trade. Forex broker reviews help and there are many websites which offer forex broker reviews. We also have our own forex broker review section. Besides the reviews, the feedback websites offer a lot of information. Nonetheless, this information should always be taken with a pinch of salt. Firstly, because competition in the industry has pushed some dodgy brokers to misuse broker feedback websites, leaving a positive feedback for themselves while posting awful comments for their competitors. Therefore, you can't necessarily trust what you are reading. For this reason it is important to check a lot of feedback before choosing a forex broker. The other reason is the some traders blame the forex broker for their own trading mistakes and write reviews explaining this. We've experienced this firsthand, even though we only offer advice (forex signals and analysis). You should conduct a thorough evaluation of all these factors in order to find a reliable forex broker and avoid scammers.
Guide to Choosing a Forex Broker
- Security – Check if and where the broker is registered and licensed
- Trading Style – Pick a broker that suits your style
- Trading Platforms – Most brokers offer Metatrader 4 or Metatrader 5 for free, but there are plenty with their own customized platforms. Have a look around to see what's best for you
- Costs – Find out for what and how much you are paying. I generally ask the customer support about spreads and other fees if I can´t find all the information on the website
- Customer Support – Customer support is imperative
- Extras – Bonuses, promotions, rebates, webinars, etc.