• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Trading Heroes

Trading Heroes

Forex Trading Education

  • Blog
  • Shop
  • About
  • Login

Chapter 9: How to Choose the Right Forex Broker

This lesson will give you important things to look for in your first Forex broker. You'll also learn how to test a broker with a very small amount of money.

Share This Course:

 

Choosing the right Forex broker is an important step for any Forex trader. You'll be giving your trading capital to this broker, so check them out before you make a deposit.

Alright, here's what beginners should look for…

Do Your Due Diligence

Forex brokers come and go, so it's important to do your basic research on a broker. This can be done in about an hour on the internet.

Research online

Find out things like:

  • Which country are they regulated in? Is it a country with strict regulation?
  • Are they actually registered with the agency that they say they are? Some shady brokers will list a registration number, but won't actually be registered (example).
  • How much do they have in capital reserves? This information is not always available, but the more the better.
  • How long have they been in business? There are legit new brokers, but a broker is generally more reliable if they have been around for awhile.
  • Does the broker accept customers from your country?
  • Are there any registered complaints about the broker, with the regulating body?

Many beginners look for brokers with the lowest spreads, but ignore the points above. These factors are much more important than a low spread.

To find out which brokers I suggest, see the short list here.

If the broker looks good after your research, then take a look the following factors.

What to Look for in a Forex Broker

Now take a look at:

  • Are the spreads fixed or variable?
  • Do you pay a spread, a commission, or both?
  • How much does it cost to deposit and withdraw money?
  • Is it easy to withdraw and deposit money?
  • What's the minimum deposit amount?
  • Is the broker ECN or Dealing Desk? Each has advantages and disadvantages.

There are no right or wrong answers here. Choose what works best for you.

How to Test a Broker

Once you have done some basic due diligence on a broker or a few brokers, it's time to get some first hand data. Their website might look good, but now you want to really put them to the test…without risking a lot of money.

This is a good way to do it…

1. Read Reviews About a Broker

Keep in mind that a lot of people are going to blame their lack of trading skill on their broker. That's one big reason that over 90% of aspiring traders fail.

So always take reviews with a grain of salt. 

However, look for common themes that could be objective, such as:

  • Not being able to withdraw money in a timely manner
  • Charging large fees or percentages for withdrawing money
  • The broker charges inactivity fees
  • Unresponsive support
  • Complaints about being solicited for other third party services like EAs or money management

Reviews to ignore are the ones that have subjective comments about things like:

  • Complaints about running stop losses (major licensed brokers won't run stops, getting stopped out a lot is usually due to setting stops too tight)
  • Complaints about rude customer service
  • Complaints about the broker trading against the client (another rookie complaint)

You can also talk to real traders and ask them which broker they trade with.

2. Test Their Customer Service

Next, contact a prospective broker and ask some questions. It doesn't matter what you ask them, but what you are really looking for is:

  • How quickly do they get back to you?
  • How good are their communication skills?
  • Are they genuinely helpful, or are they using canned responses?
  • How easy is it to contact them? Can you call a number and talk to someone immediately, or are you going to wait 3 days for an email?

This can give you a lot of clues on how you will be treated later. If a broker has poor service if you aren't a customer, imagine what it will be like when they already have your money.

3. Deposit and Withdraw a Small Amount of Money

Finally, when you find a broker that you like, the final test is to deposit a small amount of money.

Wait a couple of weeks after the deposit clears, then withdraw part of that money. A legit broker will allow you to withdraw your money with ease. They might charge you a small service fee, but nothing outrageous.

I've heard of some shady “brokers” charging a 20% “withdrawal fee.” Which is ridiculous of course, and the sure sign of a scam.

Any broker will make it easy to deposit money. The shady brokers will make it hard to withdraw.

Alright, that's what you should look for in a broker.

 

You're on a Roll!

Now that you understand what to look for in a broker, let's keep the ball rolling…

Go to Chapter 10

 

Share This Course:

Primary Sidebar

Trading Guides

How to Figure Out Your Trader Personality Profile

The Best Trading Books Ever

The Ultimate Beginner’s Guide to Forex Backtesting

How to Create a Precise Trading Plan (with PDF worksheet)

Footer

Company

  • Support
  • About Trading Heroes
  • Trading Courses and Education
  • T-Shirts & Trading Gear

Tutorials & Guides

  • Recommended Trading Resources
  • Free Forex Trading Course for Beginners
  • The Trading Blog
  • Best Trading Books
  • Forex Trading Strategies
  • The Trading Lifestyle Podcast

Community

  • YouTube
  • Twitter
  • Instagram
  • Private Trading Community
  • Contact
Trading involves substantial risk and there is always the potential for loss. All content on this website is for educational and informational purposes only and is not trading, investment, or medical advice. You should be aware of the risks associated with trading and seek advice from an independent certified financial adviser if you have any doubts. Some links on this page might be affiliate links, where we get a small commission if you purchase through the link. It doesn't cost you anything extra and we only recommend products that we absolutely love. This site uses cookies and using this site means that you agree to the use of cookies.

 

CFTC Rules 4.41 - Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Testimonials appearing may not be representative of other clients or customers and is not a guarantee of future performance or success.

 

 

 

 

 

Copyright © 2007–2022 TrueLiving Media LLC | Terms | Privacy | Risk