You find attached to this post Excel and pdf checklist for Broker choice with all points.!!!
Forex market with over 4 trillion trading volume one of the largest financial market. Forex market has no nationally or internationally regulated exchange, therefore every day grow the number forex brokers. The choice of forex broker is one of the most important decisions for the trader, because they trust their broker their money and also want to be traded fairly in trading.
1. Regulatory
a professionally designed forex broker website is no guarantee for the seriousness of the broker. You have to look for small print and check from which authority the forex broker is regulated and the corporate headquarters of forex broker.
hier is small list of regulation authority you can trust.
- Cyprus - Cyprus Securities and Exchange Commission
- Germany - Federal Financial Supervisory Authority
- Australia - Australian Securities and Investments Commission
- Switzerland - Swiss Financial Market Supervisory Authority
- Japan - Financial Services Agency
- US - Financial Industry Regulatory Authority
- US - U.S. Securities and Exchange Commission
this list does not claim to be complete. I think beyond that, any EU country regulation authority can be trusted as the guidelines are regulated at EU level. You should avoid regulatory authorities like vanuatu, caymen island e.t.c. Not because they are 100% dubious but likely that you get a bad luck higher.
2. Forex Broker type
There are 3 types of forex brokers.
- Market Maker
- ECN-Broker
- STP-Broker
I reccommend always use ECN Broker
What is an ECN broker?
The term ECN stands as an abbreviation for electronic communications network, ie for an electronic communication network. As a rule, so-called ECN brokers specialize in forex trading and their main task is to establish direct contact between market participants. One of the distinguishing features of ECN brokers is that they align information with other brokers, so that it is possible to set the correct price. Unlike so-called market makers, the business of ECN brokers is never to act against their own clients. Instead, ECN brokers basically act like stock brokers, bringing together different orders from different clients.
Pros and cons of ECN brokers
In the following, we would like to briefly give you an overview of the advantages of ECN brokers and the disadvantages you should also consider:
+ no conflicts of interest between broker and customer
+ often lower spreads than the market maker
+ Order Forwarding without Dealing Desk
+ ECN brokers do not provide their own courses
- sometimes in addition to the spread additional transaction fees
- Spreads sometimes variable
By comparing different ECN brokers, you must minimize contra-Points for you.
3. Account Details
Every forex broker offers different account types. the most important criteria for account selection are the following
Leverage and Margin:
Traders usually have a choice of between 1:50 and 1: 1000 Leverage depending on the broker.
Leverage is a short explained: loan from the broker for trading and participation in forex. with a 1: 500 leverage you have to invest 200.00 EUR for 1 lot (100.000 EUR) trading volume invest of your capital. As a result, you can earn a lot of money with minimal capital, but you can also lose all your capital on you trading account.
Note: EU has limited leverage of 1:50 by ESMA regulation when opening scalping strategy or multiple trades simultaneously. you have to choose a broker outside the EU.
Commission and Spreads:
A broker makes money through commissions and spreads. A broker that uses commissions may charge a specified percentage of the spread, the difference between the bid and ask price of the forex pair. However, many brokers advertise that they charge no commissions, and instead make their money with wider spreads.
I can reccomend to select Broker with tight spread, tha spread is important for trading sucess. You must consider both costs together and compare and in the case of doubth always choose brokers with narrower spreads. as an example 5 EUR kommison is almost equal to 0.5 pip spread.
Initial Deposit:
Most forex accounts can be funded with a very small initial deposit, even as low as $50. If the brokers offer prime account for more initial deposit, youshould know that you trade on worse terms (spreads and commision)
Ease of Deposits and Withdrawals:
Each forex broker has specific account withdrawal and funding policies. Brokers may allow account holders to fund accounts online with a credit card, via ACH payment or via PayPal, or with a wire transfer, bank check or business or personal check. Withdrawals can typically be made by check or by wire transfer. The broker may charge a fee for either service.
4. Instruments offered for trading:
Check if your desired financial instrument is tradable with the broker of your choice. Many forex brokers offer now besides forex pairs also indices or cryptos...
5. Customer Service
Forex trading occurs 24 hours a day, so a broker's customer support should be available at any time. Also check which communication channel (webchat, skype ...) the forex broker offers and also if support in a language that you can speak.
6. Trading Platform
Many brokers already offer Metatrader 4, if you want to use another platform, you should look it more closely.
7. Other considaration
what you should consider accordance your preference is.
- Min. allowed lotsize
- Auto trading allowed
- Your trading strategy allowed ( Scalping, News trading...)
