Forex Trading Online // Why, When & How

HOW TO CHOOSE FOREX BROKER?

Last 6 months brought a lot of change to forex broker club. Straining the terms and enforcing strict rules the regulators made forex brokers change a lot. Brokers took this change down to us, traders. Especially active are US based regulators, like notorious NFA (see who is regulating who in world of forex trading).

The most annoying NFA compliance rule is the new NFA Rule 2-43 (b), which requires orders to be executed on a First In, First Out (FIFO) basis when multiple positions are held in the same currency pair. This means that the position which was first opened will be the first to be closed. Second most annoying rule is the limitation of hedging.

There were many discussions on whether these rules brought good or bad for traders. Some see them as killing small traders possibilities, other see them as long overdue rules that finally ended chaos on forex broker market, and clean out the substandard forex brokers…

But as (especially FIFO rule) this limits the traders, and trading strategies, some major US based forex brokers moved their operations abroad. I am using two brokers – Alpari UK and FXDD. While first one is not under US jurisdiction, the FXDD is. And as a result FXDD moved from New York to Malta, EU. And I personally see it as a good thing, as it allows me to trade my own style.

SO, HOW TO CHOOSE FOREX BROKER?

What I am really trying to say is, look beyond spread when choosing broker. Here is my list of thnkgs to check, before opening account with new broker:

1. Look whether they are regulated, and under which jurisdiction.
2. Look whether their funds are secured and end user’s account have insurance.
3. Check their supports response time.
4. See what funding ways they are supporting (some even have paypal, others allow withdrawal of funds thru debit/credit cards on any ATM, which is really convenient as it is fast and cheap).
5. See what leverage they have, and what is minimum margin requirement when in trade.
6. See what type of broker they are (STP, ECN, NDD)?
7. What is execution time? Are there frequent requites?
8. What is minimum deposit?
9. What trading platforms do they have (do you need metatrader for EA bots, or trade signals service?)
10. Do they allow scalping?
11. Are there any restrictions?
12. And finally – check forex forums on complaints agains this broker…

Nice page that I found when checking MT4 broker spreads is http://mtspreads.com/.