Knowing the right questions to ask and doing the necessary research will increase your chances of choosing the broker that is best for you. Evaluate your provider with these important questions:
1. Are you a registered company? Where are you licensed?
Reputable and trustworthy brokers are regulated. Regulators ensure that complaints and breaches of financial rules are advertised publicly. See our list of Regulators.
2. Is the company a broker or a dealer?
Understanding the nature of a broker versus a dealer is important since there are currently a few different types of companies to work with for over-the-counter forex trading.
3. How long have you been in business and how many clients do you have?
Brokers should be evaluated same as you would evaluate a bank before setting up a large savings account.
4. Do you have good relationships with reputable banks?
Banks are more heavily regulated, which gives extra peace of mind, as well as financial security.
5. How fast is the order execution?
With modern technology executions should be a second or less than a second.
6. What are the costs?
There are three commission structures used by Forex brokers: fixed spread, variable spread or commission charge based on a percentage of the spread. Check which structure your dealer uses.
7. How many types of accounts do you have available?
Most brokers offer two or more types of accounts, commonly categorized as mini-accounts, standard accounts, or premium accounts depending on the lots traded.
8. What is the margin requirement?
The standard is 1%, but lower is better.
9. Are the spreads fixed of variable?
Spreads typically range from 0.2 pips up to 4 pips per trade for the majors. Spreads for exotic pairs can be substantially higher. Most brokers openly publicize this information on their websites.
10. Is there a demo account?
Most platforms now offer practice accounts which let you get a feel for the broker before committing any money.
11. Are rollover rates displayed prominently? Where?
Rollover fees are not usually significant unless you’re trading with high leverage and where the currency pairs have a large interest rate differential.
12. Can I lose more money than I put into my account?
Ask if you are liable to repay if your account goes overdrawn as a result of trading losses.
13. What is the quality and availability of customer service?
You want to make sure your broker is there when you need to ask a question or have a problem.