Here’s a question that I get asked all the time and if you have been reading this blog for awhile, you know the answer. But for newer traders, I thought I would go over which broker I think is best and why. This is something that should have written about a long time ago and I only recently realized that I have not written a post about it.
I don’t get any commissions for writing this post.
This really is the broker that I trade real money with and I really do believe that they are the best. There are a few other excellent brokers out there, so this is just a personal preference.
If you have any questions about choosing a broker outside of the US, you should talk to someone like Justin, who understands the rapidly changing broker landscape much better than me.
Before I reveal which broker I like the best, it is important to go over what I have seen go wrong at other brokers so you know what to look out for.
This pisses me off…
Some brokers will charge you a monthly fee if you do not trade that month. I think that is completely ridiculous. This forces newer traders into taking bad trades because they “have to” trade.
I experienced this with one broker and I was furious. It was my fault though, I didn’t read the fine print. I was charged like a $30 fee in a $300 account.
That’s a big hit!
Be sure to check for inactivity fees. If there is one, move on…there are better brokers out there.
Sketchy Foreign Brokers
Some foreign brokers are going to promise the world and you may be tempted to trade with them. Don’t do it.
You need to use a broker that is in a country that will protect you if the broker does something illegal or goes out of business. Usually the attraction to foreign brokers is the increased leverage.
If you can’t make money at 50:1, you won’t make money at 500:1.
Start small and learn to trade well.
Some smaller brokers may not have accurate data feeds and that can lead to large gaps or triggering your stops when they shouldn’t have been triggered. The reputable brokers will have accurate data feeds.
Can’t Access Certain Pairs
I have traded at a broker that only allowed me to trade 5 or 6 (I forget the exact number) currency pairs in a mini account. It’s not as though I will be trading every single pair at the same time, but if I so happen to backtest a strategy that works best in GBPCHF, for example, I do want the ability to trade it. Needless to say, when I discovered that I couldn’t trade the GBPCHF and the GBPJPY with that broker, I moved my money immediately.
Difficult To Withdraw Money
Another thing some brokers do to keep your money with them is make it an act of god to withdraw your money. Whenever you start trading with a broker, you should start by putting a small amount of money in first to test them out.
Do some trades and deposit and withdraw from your account. If they give you a hard time, move.
My Vote For Best Forex Broker
I’ll get to the point…my favorite Forex broker is Oanda. They are really easy to deal with and I have not have any of the issues listed above. They offer Metatrader for excellent charting, but that is not always good for day trading. If you are a day trader, I have found that their Java platform works very well.
The best of both worlds.
One thing that separates Oanda from other brokers is the fact that you can trade nano lots. What does that mean? Well, in plain English, that means that you can tailor your lot size all the way down to $0.01 per pip. That will allow you to take almost any trade with almost any sized account, while still using proper risk management. Even with mini lots at other brokers, you may still be over trading with one mini lot in a small account.
Trading nano lots for $0.01 per pip will allow you to take a trade with a 100 pip stop in a $100 account and still only risk 1%. Try doing that at any other broker.
You can integrate Oanda with MT4i and MyFxBook for automated trading reports. Oanda also has some of the lowest spreads in the industry. This is one of the main reasons I trade with them instead of with some of the other big brokers.
Above all else, they are financially stable and meet all financial requirements (last I checked). Of course, there is no guarantees with any company, but my research showed that they are one of the best.
Again, there is no benefit for me to mention this, but I do because I have had a great experience with them. Which broker is your favorite and why?