How does one recognize a good FX broker?

Well from my experience, I can say it was very time-costly for me to recognize a good forex broker. It took me careful researches….long hours of researches(most times leading to midnight reading) as I don’t joke with anything that makes good money. Once bitten twice shy. Forex is as real as life and death and there are millions to be made if approached properly and with diligence.

Forex brokers are vital for both retail and institutional Forex traders success and it’s also very important to trade using a reliable trading platform. Forex trading is not restricted to professional traders or a few specially chosen people in the market. And top rated FX brokers are able to cater to a wide variety of needs, beginners and amateurs included. All Forex brokers, both good and bad, are free to be used by any trader, regardless of their experience, budget, or type of investment.

The factors to consider are: trading platform, execution of trades, ecn broker, slippages in trades, Stop loss hunting, deposit/withdrawal processing, offering of bonuses, regulatory body, customer service and of course what other clients say about the broker.

1. Trading platform: 
   Is it free of charge?

Is the software Internet (Java or HTML), Windows or Mac based?

What types of orders are available?

What charting tools are available?

Is the GUI user-friendly?

Is there an access to the historical data and backtesting of strategies?

Does it provide additional features?

A solid trading platform is a must for any broker to be worth your time. If the broker uses unreliable and complex trading software, there’s a good chance it will be ignored by most traders, especially beginners. Of course, the main priority for an experienced and professional trader is to check the reliability of the trading software before actually opening a live trading account. Usually, a broker’s platform would be powered by some of the most innovative and leading software products like MetaTrader, cTrader, TradingStation, JForex, and other leading third-party trading solutions.

2. Execution: It is mandatory that your broker fills you at the best possible price for your orders. Under normal market conditions (e.g. normal liquidity, no important news releases or surprise events), there really is no reason for your broker to not fill you at, or very close to, the market price you see when you click the “buy” or “sell” button.

For example, assuming you have a stable internet connection, if you click “buy” EUR/USD for 1.3000, you should get filled at that price or within micro-pips of it. The speed at which your orders get filled is very important, especially if you’re a scalper. A few pips difference in price can make that much harder on you to win that trade.

3. ECN broker: we different types of forex brokers out there….market makers or dealing desk, stp (straight through processing) and then ecn(electronic communications networks. You can google these types of brokers to read more about the differences. But anyone that wants to succeed must stick with a real ecn broker. At the end of this answer I will give you a few that I have filtered.

4. Slippages in trades: well the bitter truth is that slippages are almost inevitable in forex trading. However, some are positive and most are negative slippages. With a good broker, you should not experience much slippages against your trade. In fx, slippage occurs when an order is executed, often without a limit order, or a stop loss occurs at a less favorable rate than originally set in the order. Slippage is more likely to occur when volatility is high, perhaps due to news events, resulting in an order being impossible to execute at the desired price.

5. Stop Loss Hunting: is a strategy that attempts to force a trader out of his positions by driving the price of an asset to a level where many individuals have chosen to set their stop-loss orders. When this happens, you get stopped out at the price far from your set SL and it really hurts because you probably should profit from that trade. Be careful with brokers that do this often.

6. Deposits/withdrawals: Good FX brokers will allow you to deposit funds and withdraw your earnings hassle-free. Brokers really have no reason to make it hard for you to withdraw your profits because the only reason they hold your funds is to facilitate trading.

Your broker only holds your money to make trading easier so there is no reason for you to have a hard time getting the profits you have earned. Your broker should make sure that the withdrawal process is speedy and smooth.

7. Bonuses: Truth be told, no good broker will offer you bonuses. So be careful if you’re being offered 50% 100% bonuses or any at all. That’s a bait at large!

8. Regulation: The first and foremost characteristic that a good broker must have is a high level of security. After all, you’re not going to hand over thousands of dollars to a person who simply claims he’s legit, right?

Fortunately, checking the credibility of a forex broker isn’t very hard. There are regulatory agencies all over the world that separate the trustworthy from the fraudulent.

Below is a list of countries with their corresponding regulatory bodies:

United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)

United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)

Australia: Australian Securities and Investment Commission (ASIC)

Switzerland: Swiss Federal Banking Commission (SFBC)

Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)

France: Autorité des Marchés Financiers (AMF)

Canada:  Autorité des Marchés Financiers (AMF)