Forex Broker Guide
Introduction
The following is a list of questions you
may like to consider before opening an
account. You can use this checklist to
narrow down your selection of companies that
fit your requirements. You may also wish to
refer to the
forex broker ratings
page on this site to read about traders
unique experiences with particular brokers.
The following links will also give you
some background information on U.S. FCM's
(Futures Commission Merchants).
Selected Financial
Data for FCM's
NFA Background
Affiliation Status
1. Word of Mouth
What do other traders say about the
broker?
What is their customer service like?
2. Customer Protection
Is the broker regulated?
What regulatory organisation are they
registered with and what protections does it
afford you?
Are client funds insured against fraud?
Are client funds insured against
bankruptcy?
3. Execution
What business model do they operate? i.e.
Are they a Market Maker[?],
ECN[?]
or no-dealing desk broker[?]?
How fast is their order execution?
Are orders manually or automatically
executed? [?]
What is the maximum trade size before you
have to request a quote?
Are all clients trades offset?
4. Spread [?]
How tight is the spread?
Is it fixed or variable?
5. Slippage [?]
How much slippage can be expected in
normal and fast moving markets?
6. Margin [?]
What is the margin requirement? e.g.
0.25% margin = max 400:1 leverage [?]),
0.5% margin = max 200:1 leverage, 1% margin
= max 100:1 leverage, 2% margin = max 50:1
leverage, etc.
Does the margin requirement change for
different currency pairs or days of the
week?
At what point will the broker issue a
margin call?
Is it the same for standard and mini
accounts? [?]
7. Commissions
Do they charge commissions? (Most market
makers' commissions are built into the
spread)
8. Rollover Policy [?]
Is there a minimum margin requirement in
order to earn rollover interest?
What are the swap rates like for going
long or short in a particular currency pair?
Are there any other conditions for
earning rollover interest?
9. Trading Platform
How intuitive and functional is it to
use?
Are there many disconnections during
trading hours?
How reliable is it during fast moving
markets and news announcements?
How many different currency pairs can you
trade?
Do they offer an Application Programming
Interface (API) to allow you to automate
your trading system?
Does it offer any other special features?
(e.g. One click dealing, trading from the
chart, trailing stops, mobile trading etc.)
10. Trading Account
What is the minimum balance required to
open an account?
What is the minimum trade size?
Can you adjust the standard lot size
traded? [?]
Can you earn interest on the unused
margin balance in your account?