What the best broker is for you might not be for someone else. They come in many different flavors, although some of them do better than others in all categories. To try one broker you will have to open an account, hopefully, what you get on the demo you get on the real account. Yet it is hard to know if the one you have selected is good for you unless you have some experience.
To get this idea you need a comparison. However, few will try 20 different brokers just to say this one is right. There are so many brokers out there, and most have some part of business traders would probably dislike. When you want to start out trading for the first time, you do not have a clue what to look for and what to avoid in the first place. At some point, you are probably going to get dissatisfied with the one you are with, you will want to find another because you do not like how you are treated.
The decision is so critical that even if you have the best trading system and great results, it is the broker that holds your money. Getting this right is very important so deep research has to be made. This article will present how one prop trader is carefully setting the rules to find the right one, and also some of the example brokers you might find interesting and why they might be good.
Traders from the US might have a problem with the selection since the regulations are harsh and brokers have an easier time just not to accept clients from this country. This is the first question-stop on your research – do they accept clients from your country? Brokers like it if you stay a long time with them. More trading is done and more chips for them. Clients that do not understand the long game about forex trading get wiped pretty soon. These clients do not leave much on the broker’s table. Traders who follow a money management system, have their algorithm or a strategy are very welcome. Honest brokers want trading-educated customers, unlike the other side where fake investment platforms look for random naïve victim-clients.
Investors or clients want security first. Your capital is at risk when you trade, this risk is under the inherent broker risk you take once you deposit. It is an unavoidable risk you want to be at the minimum. How safe is a broker is determined by several factors we are going to speak about. There are no special calculations or analysis, just common-sense conclusions – all you need to stay away from shady investment platforms. The second factor you want to investigate is the Ease of Use. No one wants to have delays, unclarities, frequent changes, unintuitive account management apps, perpetual requests, and so on. You want orders executed without gimmicks, the broker is there to give you just that.
Trading Conditions Matter
After these two most important factors on how to find a generally good broker, you want to have good Customer Support too. When you trade for a long time, it is very likely there will be a problem with liquidity, your orders, slippage, and other abnormalities you want to know more about. More importantly, you want the issue solved as quickly as possible. Most brokers save in this area, professional and knowledgeable staff is not easy to afford and come by. Whatsmore, the broker agents need to understand the problems you are experiencing. You cannot afford to have broker related irregularities unsolved because of the language or knowledge barrier. The final factor some might set as critical is trading and other costs related to your account. Now, when we talk about the spreads, they should be the broker’s main income source and trader’s main expense.
Spreads Matter, Too
Nowadays when we have good competition between brokers, the spread became small enough it is not a deciding factor, even when you trade frequently. If we compare the spreads, the difference is hard to see. If you decide to go with the broker with a lower spread you saw directly from the platform, you might be surprised it is higher in the evening when you trade than with the other broker. Spreads dynamics across time and assets are unknown to you and can only be measured with special tools that need time. Even then, judging a broker based on the spread only is not going to be a good choice, there are other specifics traders are interested in according to their trading style. The days when the spreads were an issue are over, brokers with high spreads got pushed away from business or lowered their spreads to keep the clients.
Jurisdictions and Regulations
Safety first, then we can worry about other risks. Here is an opinion on what information to pay attention to when assessing how safe is a particular broker. Jurisdictions are a big factor in how a broker can conduct business so you need to pay attention to where they reside. Countries like the USA, UK, Australia, Singapore, and Japan have high-standard control measures that are applied promptly, leaving no room for unethical practices with your capital. Brokers who do not want to mess opening an office in these countries do not put your capital safety first too. Capital adequacy levels are also high here, giving you extra peace of mind. Brokers outside of these countries could also be classified as safe although they will have to fall under ESMA, CySEC, FCA, or other reputable regulatory bodies.
Of course, having regulations on brokers also carry more effort to sign up with them, but it is a good thing to have safety procedures if it means safety to your capital too. On the other hand, countries like Malta, Russia, Costa Rica, Belize, Vanuatu, other island countries, are not very appealing when it comes to funds safety. Not all brokers from these countries are bad, scam, or unethical in another way, they just create precaution since the chances of finding one such broker here is high. Brokers with great offers could go with regulations or jurisdictions from offshore countries just because they do not require a lot of capital adequacy to start a brokerage. However, no matter how good they are, it is better to go with medium and large capital brokers for several reasons. To get recognized, a broker has to stay in the business for some time, more than 3 years. A legit broker can survive only if they have a well-established business plan, structure, and execution supported by the traders’ reviews. All this takes time. Brokers that have the above traits create enough capital to be adaptable to sudden changes, which in turn means they are less likely to pose a risk to your investment.
Ease of Use
Ease of Use comes after you sign in for a demo account once you establish a broker is safe enough. If you are getting confused with the tools they provide or do not get the quotes you were expecting, how can you be sure other surprises are not on the way? When it is time to make a decision, there is no room to get confused. If you find yourself searching for something for too long, it is a sign of a badly organized platform, website, or other tools. There is a risk it can cost you if you are not well informed with terms or not well acquainted with a particular platform. Some platforms can be promoted as made for professionals with an abundance of options, yet there might be too much to comprehend them correctly. If trading requires too many steps to check and type, it is not intuitively made. This also creates negative associations towards trading in general affecting your future decisions. Most of the brokers will offer MetaTrader 4 or 5 platforms which are enough for the majority of traders. Proprietary platforms should not create obstacles of any kind if they are offered by the broker.
Another consideration is the execution times. Traders should not only aim for low latency but also consistency in order executions across asset categories. This can be tested with a demo account, however, be sure to check other assets, even if you are not going to trade them. A problem in one could mean liquidity is not a top priority for that broker. If you find out your price levels on orders are not precise when executed, and the issue is not caused on your side, be sure to mark these moments. A broker is not suitable for trading if it repeatedly cannot follow your order specifics precisely. This happening more than once per year is a sign you should think about migrating. Contacting customer service to correct this issue is where we come to the next criteria.
Customer Service can give you an additional headache. Experiencing long waiting times on chat or phone call is a sign the broker is understaffed or many have problems similar to yours. Understaffed customer service department points the broker is cutting costs, and this could further mean inadequate management, capital, or other issues that increase the broker risk. Another sign of this is outsourced, non-native English agents responding to your questions. Communication needs to be flawless when your money is at stake yet many brokers outsource Customer Service and fail to give proper integration. Customers dislike this trend across industries and the right broker knows this. A broker with native English customer support agents is a very good sign you at the right place to invest.
Since the cryptocurrency era started, a new type of brokers emerged to the scene, offering a very easy sign-up, great trading conditions, almost unrestricted client acceptance, and, unfortunately, very high safety risk. Interestingly, the benefits come by using cryptocurrency for transactions, cutting whole departments other brokers need to have, making it relatively easy to open such brokerage business. There are no safety regulations when it comes to bitcoin transactions, there are no guarantees your capital is safe or stored in a bank. The absolute holder of your funds is this broker. However, the popularity of such brokers is growing. The need for such easy-going trading on a smaller account scale is high. Brokers like this rely on positive client reactions to keep clients coming, the deposits are not as big as with the large and regulated brokers but fill the need of small traders to enjoy trading with all the benefits cryptocurrencies give.
Security & Safety
The safety research is relatively quick to do. Other criteria such as Ease of Use takes some time to be checked. We will present two examples that fulfill what most traders would like to have with a broker. Starting with the Blueberry Markets, this broker from Australia is one of the top-rated brokers on the two most reputable review websites. They are mid to highly capitalized and backed up by a network of companies. Blueberry Markets follow the minimalist approach, provides hassle-free trading with great customer support and a trading environment. Professional traders like pure trading, no need for any bells and whistles. When you see the Blueberry Markets website there is nothing special, it is very basic except they can show one of the best ratings a broker can enjoy, for more than 2 years.
Trustpilot and Forex Peace Army good ratings are hard to achieve, especially when you have random bad ratings off traders who lost their accounts by their fault. Trustpilot is general but FPA is a forex specialized website, top ratings on both is an amazing achievement. Now, Blueberry Markets is an ECN broker, trading is done via MT4 and MT5 with great conditions, customer support is native English, and is focused on traders’ needs. This broker took a similar business approach to customers like Google, as our professional prop trader describes. When you compare Google search engine with Yahoo or others back then, it is obvious the only thing you see on a page is a search bar and two buttons. Yahoo and other search engines were stuffed with other materials. The simplicity, focus, and investment in what customers need to make Google the best search engine today. Blueberry Markets has the right approach even though some demanding traders might need a wider asset range than offered.
The second broker example is Markets.com. This very highly capitalized and CySEC regulated broker does not enjoy the ratings like Blueberry Markets. They are worldwide, well known, and has an amazing array of trading platforms and assets for even the pickiest of traders. Having a well-managed company with big capital invested in platforms, assets, and liquidity providers is showing at every step. The sign-up process is not very easy with this Dealing Desk type broker. The website is far from simple, and the platforms will still require you to learn new features if you are familiar with the MT4/5. Markets.com is almost the complete opposite of Blueberry Markets. So many options, offers, assets, platforms might be too much, especially for a beginner trader. There are a lot of tutorials, however, only traders with some experience will like what they see. Markets.com is a great pick once you want to expand from trading only forex currency pairs into a rarely seen array of asset categories. You will have English speaking customer support and in other European languages, good executions, platforms, and additional content.
Many other brokers fit the criteria we have set. Scam and dishonest brokers also dominate outside them. Having examples and other info above will be enough to guide you to the right one no matter your trading style, just be sure to put the effort into research before you put the money in.