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Wednesday, November 17, 2010

How to find a good Forex broker

For sure, one way not to find it is by basing your judgment only on online reviews. I have been spending hours of precious time during the last two weeks trying to find a good Forex broker.

At first I thought it would be something easy. Boy was I wrong! By now I have probably been through every website with Forex brokers reviews you have read out there. And it's really disappointing to see so much crap and scum everywhere. Most sites offer fake reviews, most sites get paid in order to raise the rating of specific Brokers with fake reviews. Furthermore there is no guarantee that the reviews are legit and not written by the brokers themselves. In the end Internet is so impersonal! So, by default I don't believe in anything. Lies everywhere....

I ended up looking for reviews of the sites that offered the reviews haha, but that's a never ending story as well. Because then why not look for reviews of the sites that offered the reviews of the site that reviews the Forex brokers!?!??!?

The first thing that surprises is that Forex is not a regulated market. So, technically I can be a Forex broker tomorrow!! And then Henrik can be making money off the spread on your trades by immediately doing the opposite of your plays! ain't that lovely! So, my first requirement is to filter out all those brokers that are not regulated by any regulatory body whatsoever. Not that they are all scum, but I just want to play it safe, and probably my first trade is not the money I put on a Buy limit order but the selection of the right broker. So, sorry, I don't care about hundreds of five stars reviews, if the broker is not regulated I forget about it.

Since I am just a little dot in this world and do not want nor do I deserve to be sued yet, I won't mention names of liar/disrespectful/crappy brokers. I will limit myself to mention those that after so much consideration and research I am considering in order to start trading next month or probably early next year in the Forex market.

In the US the main regulatory bodies are the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). By going to the National Futures Association website I started searching for information by "Firm Name" of all the names that I had been writing down from other places and I could start seeing some light about the Forex Brokers. Regulatory actions, Arbitration awards, whether or not they are regulated and by whom, etc .

Here is my initial list, which will soon be reduced even more:
- Alpari
- ATC Brokers
- Oanda
- MB Trading

In addition to being regulated I want an ECN broker. I also want it to allow integration with Meta Trading Platform (MT4 standard and widely used platform for Forex). I want to see some recognitions and public and serious awards. I will disregard those who offer irresponsible 400:1 leverage or those that offer traders to begin with very little amounts. And of course those who offer cash incentives for signing in with them. They look like casinos from Vegas, why do they offer incentives? Maybe they know they will make money off from you in the long run anyways? mmmmmm. But the first step is finding some of the regulated ones and then cut the crap short and filter out by the rest of the criteria.

I will follow up on my final decision as I still haven't checked any of the last aspects mentioned one by one for each broker. But at least now there is a good chance that the ones I am investigating have some degree of decency, so good these days.

Related articles:
Find the right forex broker
First month results in Alpari-Uk

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  1. Great article, I really agree that this step can cause people to falter at the first hurdle when beginning. I would steer clear of highly leveraged accounts and incentives also. I hope you found a good broker in the end! Personally I use Global Forex Trading and Tradestation. Once you have filtered out the unregulated ones it does come down to preference and whether the platform works for your trading style. I have shared your blog hope that's ok with you?

  2. Hey Gill, thanks for the Comment. Yes, in the end I have found two regulated and excellent brokers. AlpariUk and Go Markets. I've been a client of both and I'm happy with their level of professionalism and customer service. Those are the two that I have used. But here's an interesting list by a very respected blogger

    Thanks for sharing my blog!