How to select a broker?

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TradeKir

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I have read a lot of posts about scam brokers on this forum.
I would like to make a little survey of your opinion: What is the 5 most important thing for you when you select a broker?

I think there are some "visible" thing like the country where it is regulated at, or the pairs you can trade on.
But you need to give it a try, to get some information of the spreads or the spikes.

What do you think?

Here is my list:
1. Location
2. Spread
3. Tick numbers in a day for the main pairs
4. Support
5. SWAP
 
Hi TradeKir,
I've been working on a project recently that covers this question - and I've copied and pasted it here . . .

After ‘which book do you recommend?’ one of the most frequently asked questions by new members is ‘which broker do you recommend?’ This is very hard to answer as new brokers spring up daily (or so it seems), and long standing ones continually update their products and services in a bid to remain competitive. As a very rough guide, you’ll need to consider the following eight points when choosing a broker . . .

#1 Regulation & Security
First and foremost, you need to avoid the riffraff and unregulated firms. Don’t be seduced by glitzy looking websites, laden with attractive offers and low spreads etc. Apply common sense, gut instinct and, above all, conduct due diligence. Make sure your broker is properly regulated by a respected authority that has real clout. Specific advice explaining how you go about doing the above can be found in this thread: Is my broker / money safe - basic due diligence

#2 Negative Balance Protection
On 15th January 2015, the Swiss National Bank (SNB) removed the peg that held the Swiss franc at a fixed exchange rate with the Euro, resulting in complete turmoil in the markets. Currency traders around the globe suffered catastrophic losses. In light of this, some brokers now offer ‘guaranteed negative balance protection’. This simply means that in the event that something like this happens again, or a ‘black swan’ event like 9/11 occurs, you won’t end up owing your broker more money than you have on deposit in your account. At worst, you’ll wave bye-bye to your account, but you won’t be saddled with a potentially crippling debt. Not all brokers offer this facility, so it’s up to you to decide whether or not this forms a necessary component of your overall risk management strategy. Failing this, choosing a broker that offers guaranteed stop losses warrants serious consideration. This facility enables you to cap any losses to a fixed amount set by you.

#3 Tradable Instruments
If, for example, you wish to trade U.S. stocks, you’ll want a broker that offers the largest universe of instruments (i.e. companies) and whose spreads are narrow and whose commissions are low - compared to other brokers.

#4 Financial Vehicle
Most brokers only offer one or two financial vehicles with which to trade. For example, a bespoke futures broker will only enable you to trade futures contracts and not shares, options and CFDs etc. At the time of writing, Interactive Brokers (IB) is one of the few brokerage firms that offer a huge selection of instruments that can be traded via multiple financial vehicles from a single universal account. (Please note: T2W is not affiliated in any way with IB and this is not a recommendation to open an account with them.)

#5 Account Size
If you only have limited capital with which to fund your account, you are likely to be restricted not only in your choice of broker, but in your choice of financial vehicle and markets as well. For example, you are not going to be able to open a ‘Patten Day Trader’ (PDT) account with a direct market access (DMA) broker to trade U.S. equities, as there is a legal requirement to have a minimum of U.S. $25,000 in your account.

#6 Trading Platform
This is the mechanism you use to enter trades, set stop losses and exit trades etc. There are many different platforms with different features; most traders like some more than others. The one you choose must offer the features you require and you must be comfortable using it. Most brokers offer a demo account so you can get used to their platform without any obligation to fund a live account with them.

#7 Customer Service
This is very important, so much so that some members would argue that it’s better to pay a little extra in spreads and/or commissions and get the level of customer service you want, than it is to go ‘cheap and cheerful’ which won’t include much in the way of client help and support. Check out the Broker Reviews section to see how the broker you propose to use fairs.

#8 Experience
Experienced traders usually advise novices to steer clear of sophisticated derivative products such as Contracts for Difference (CFDs) and options. So, skip CFD and options brokers for the time being at least! If you’re unsure what type of broker is suitable for you - just start a thread in the First Steps forum.

Lastly, one bit of advice often imparted to new traders is to open a margin account rather than a credit account. The reason being that you are advised to only trade with money you can afford to lose. That means money you won’t miss if it’s not there, as opposed to your housekeeping pot, mortgage funds or savings earmarked for a holiday or a school trip for your children etc. Credit accounts encourage a gambling mentality, as your broker can continue to lend you money to cover your losses. Margin accounts simply stop operating once your capital falls below a certain level. It’s then up to you to add more funds if you want to. With a margin account, you are in control - not your broker.

Hope that helps,
Tim.
 
Thank you Timsk!

Negative Balance Protection, is a very good idea!
I would mention the account balance compensation rate too, which could be important if the company goes bankrupt, like Alpari.

Yesterday my freind suggested me this broker comparison site, which could be very useful, if you are interested in technical details:
http://forexbrokerranking.com/
 
Here is mine
1 Lie detector test ( 70% fail at this point)
2. Show me up to date performance ( 25% fail here)
3. Invite me to visit your office ( another 3% fail here. They think a bedroom is an office!)
4. Will you constantly tell me the truth and promise never to scam me? ( 2% fail here)
 
TradeKir i am begginer at forex and from the information that i wrote every day, i know that choosing a broker is very important part of the succes. So can yuo recommend me a broker to make a live account wiht?
 
My experience, examine the broker by yourself, don't trust anyone (except me) :D A broker could be suitable with anyone but not you.
 
TradeKir said:
I have read a lot of posts about scam brokers on this forum.
I would like to make a little survey of your opinion: What is the 5 most important thing for you when you select a broker?

I think there are some "visible" thing like the country where it is regulated at, or the pairs you can trade on.
But you need to give it a try, to get some information of the spreads or the spikes.

What do you think?

Here is my list:
1. Location
2. Spread
3. Tick numbers in a day for the main pairs
4. Support
5. SWAP
Click to expand...

Since you mentioned spreads, you might want to be more specific and say how to choose a forex broker.

Location is not really an issue for me, although I would not choose a broker outside of the US, Canada or Scandinavia.

If you trade futures, options or stocks, IB has the lowest commissions for the aforementioned instruments and they have some of the tighest spreads for forex but they require a lot to trade it if you want access to Interbank rates.

What types of financial instruments do you trade?
 
Guys, I have registered two of my accounts the system mentioned above (www.forexbrokerranking.com ). I got my first report on Swissquote, but I’m still waiting for DCFX.
Let me share a few interesting things with you:
I made 66 trades in last month, but only 14 of them was flawless, and 52 was closed with some kind of slippage. From this 52 faults, 17 was good for me (I earned with the slippage) but 35 was against me.

In total I lost money with the slippage.
My trading costs was the following:
-3600 USD Spread
- 390 USD Slippage
- 10 USD SWAP

My AVG target distance was 113 points on a 5 digit account.

The system indicates the average spread of the last 50 ticks once a position is closed.
38 positon was closed with a spread higher than average, and 28 position was closed with lower than average.
Furthermore the spread was extreme high at 20 times, but it was extreme low only 7 times.

What you think about it?
 
Being a new bie i was also looking for same....thanks for sharing such relevant information!!
 
july said:
Being a new bie i was also looking for same....thanks for sharing such relevant information!!
Click to expand...

July - I am an experienced Derivatives Broker at an FCA Regulated, City of London firm, I would be happy to assist you further if you so wish - Within this, I would be happy to schedule a call with a Senior Trader and / or a Compliance Manager if this would help you also
 
TradeKir said:
Thank you Timsk!

Negative Balance Protection, is a very good idea!
I would mention the account balance compensation rate too, which could be important if the company goes bankrupt, like Alpari.

Yesterday my freind suggested me this broker comparison site, which could be very useful, if you are interested in technical details:
http://forexbrokerranking.com/
Click to expand...

More and more sites are starting to use this image no robot feature. What ever I do, I never pass the signup process. Few days ago I had the same problem with another site. Either I am doing something wrong all the time or the use of this verification system will cause the owners not to have too many signups. Pitty, I wanted to take a look....
 
I guess an easy way to select a broker is to make a list of top reputed brokers first by doing some research on internet. Once you highlight these two or three brokers, download their demo accounts and start practicing them. After some time you will get familiar with their platform, now compare all of them. Demo accounts are almost similar to their real trading accounts so be wise in choosing which broker can meet your requirements.

Once you chose the broker to go live with, do not put all your investments directly but start with small amount to check their internal processes like withdrawals etc. I guess you have already chosen the right broker to trade.
 
progix said:
I guess an easy way to select a broker is to make a list of top reputed brokers first by doing some research on internet. Once you highlight these two or three brokers, download their demo accounts and start practicing them. After some time you will get familiar with their platform, now compare all of them. Demo accounts are almost similar to their real trading accounts so be wise in choosing which broker can meet your requirements.

Once you chose the broker to go live with, do not put all your investments directly but start with small amount to check their internal processes like withdrawals etc. I guess you have already chosen the right broker to trade.
Click to expand...

Hello,
I'm trying to find a good Broker. I read a lot of good and bad reviews for many Brokers. Could you please share this list of those 2-3 Brokers you have chosen?
 
Reviews sites can be helpful in evaluating these brokers, make some own research and I guess some good brokers like optiontrade, cherrytrade, iqoption, stockpair, binary.com etc could be consider to start practicing their demo accounts. I am personally trading with optiontrade.
 
progix said:
Reviews sites can be helpful in evaluating these brokers, make some own research and I guess some good brokers like optiontrade, cherrytrade, iqoption, stockpair, binary.com etc could be consider to start practicing their demo accounts. I am personally trading with optiontrade.
Click to expand...

Thanks. I've been researching for a while and I created several demo accounts. The thing is that but many Brokers offer different conditions on their Demo accounts. That's why I'm asking for some user experience.
 
No problem, you can ask any queries you may have. I guess most of the brokers offer free demo accounts and while you trade with them you will get familiar with their internal processes easily.
 
Fahad Fx said:
Selecting a right broker is very difficult task; because there are almost thousands online broker in Forex retail market and most of them are found to be scams. For leading a secure and profitable trading life, we the traders first of all have to choose in regulated trading broker which guarantee their clients funds with exclusive trading facilities as like larges bonus, lowest trading spreads, minimum margin requirement, high leverage and much more.
Click to expand...

Sometimes large bonuses are very tricky...so we should read very carefully their terms and conditions
 
Tight spreads.. execution time... fast support.. withdrawal time... this is what i look for
 
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