Right now there are like 2892 Forex brokers on the market and when you’re new to Forex trading it’s tough to get along with it. That’s why you might ask which of these 2892 broker to choose. Obviously it’s not possible to give a general answer because there’s not the best Forex broker. Just like other products, there’s no one that can satisfy all costumer needs perfectly. The following article shows you where you have to pay attention but we’d like to make a recommendation in advance: A broker that comes pretty close to the ideal broker for novice traders is eToro without a doubt. This broker offers a very easy to use platform and is a worldwide leading broker. Simply click here to take a closer look at eToro!
There are more important and less important criteria that determine whether a broker is the right choice or not. Some traders don’t care about commodities but others love to buy Gold in rough times. Others love a high leverage of 1:1000 while others think it’s too risky and don’t need leverage that high. Also the amount of currency pairs is a bit ambivalent. Too many currency pairs confuse novice traders. Exotic currency pairs can often be traded with a high spread only and are pretty useless. With only a few currency pairs you won’t get confused but especially in weak market conditions, you don’t have a broad choice.
You can go on and on with this list and it’s not possible to make recommendations for all traders. That’s why you should take a look at our Forex broker comparison and determine what criteria you really need.
Avoid Forex Scam
There’s nothing worse than choosing a broker that is pure scam. There are lots of ways to scam Forex traders. Either there are issues with money transfers (see below) or positions are somehow manipulated. Latter looks a lot smarter but hard to execute. It’s way easier to find reasons not to accept a withdraw and keep the money. And this can be very painful as you know exactly what’s going on and that your withdraw should be accepted instantly.
When a broker is manipulating trades it’s possible that stop losses don’t execute without any action by the trader. This way losses can be maximized. Reliable brokers have a money back guarantee in these cases. Brokers that scam just keep the lost amount of money. This is not an easy topic and we dedicated a whole article about Forex scam. You should take a closer look at this article. Avoiding Forex scam is the most important thing when selecting a proper broker.
ECN or Retail Broker?
You can choose between an ECN and a Retail broker. Generally speaking, a Retail broker is better suited for novice traders and intermediate traders should pick an ECN broker. The reason is that ECN broker often take no spread or a very low spread but also take a fixed commission for every position. A fixed commission may be $ 3 and when you’re trading with $ 20 you can also throw your money out of the window or burn it. Paying such a commission only makes sense when high volume positions. Most ECN brokers don’t even allow you to open an account with less than $ 10.000. Novice traders should pick a retail broker instead like eToro.
Deposit and Withdraw
Transferring your trading capital is vital to being able to trade. That’s why you have to ask yourself how to transfer your money from A to B, meaning to a broker and back again. Everybody fears that a deposit does not even reach the trading account. In this case there are two explanations: Either the bank made a mistake or the broker somehow lost the transaction or made any other mistake. Both is possible and happens in the world of Forex. Hoping that it won’t happen to you is not sufficient. You have to select your broker properly and avoid these cases.
In our Forex Broker Comparison we don’t list any broker where issues with payments are known or likely to happen. Even a delay in payments should be considered as warning signal. And if you’re making a wire within the European Union and have to wait more than 3 days to see the money in your account, your alarm bells should ring. With other payment methods like Moneybookers, Neteller, ClickandBuy or Paypal, deposits should be credited instantly. And reliable Forex broker do just that.
Deposits and withdraws are not that easy. The most important thing is to avoid picking a broker that has issues with payment transfers. That means deposits are slowly processed or it takes weeks until your withdrawal will be accepted and you have to send thousands of documents to verify your identity. Just imagine you lose a deposit or withdraw once in ten times, you have to show very solid profits to compensate that.