Spread
The spread is the difference between the bid and the ask price of a pair. The bid price is always lower than the ask price. When you place a buy order, you get filled on the ask price. When you place a sell order, you get filled on the bid price. The spread value is set by the broker and can be different for every pair. With every trade you make the broker profits from the spread, and you need to cover the spread to at least break even. Bottom line: you want the lowest spread possible. Now, if your strategy only calls for a few trades a week, then the spread won’t affect your trading as much as a scalping strategy. So the spread criterion needs to be weighted by your trading strategy.
Leverage
Most brokers offer very high leverages up to 400:1. But that’s not necessarily a good thing as it can lead to margin calls. It is not recommendable to trade with anything higher than a 10:1 leverage. So leverage should really be the last thing to look for.
Software and aervices
Many forex brokers offer their own custom trading platform to their clients. MetaTrader is a very popular platform among forex traders and is offered by many brokers. Besides the software, try to look for what services are offered. Many brokers offer news feeds for free, and some have very good education material and analysis tools. Finally, look for the methods to deposit and withdraw funds and see if they suit your. Checks and wire transfers are often used but there might be limitations depending on which country you live in.
Accounts
It is now possible to trade mini and micro lots (1 lot = 10,000 and 1,000, instead of 10,000) with quite a few brokers which allows you to start with a very small balance. Other brokers impose a minimum deposit. Make sure that you can open an account with the broker by contacting them as many can't serve certain countries
Execution
Brokers who fill the first four criteria are quite easy to find. But if you can't get a descent trade execution or if you experience frequent downtimes then your trading will turn into pain much more rapidly than making bad trades. It is a good start to read the reviews available online, but we also recommend that you only start with a small balance in case things turn to the worst. You can add more funds after you’ve gained confidence in the broker’s services . It is also important to note that the trading experience on a demo account can differ significantly than that of a real account.
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