Finding a good honest forex broker is actually is not as easy as it may look. Especially for newbies, its not so straight forward to know which to pick. Some brokers have professional looking websites with all sorts of flashy animations to give the impression that they are reliable but it does not necessarily mean they are. It just means they hired a good web developer.
Here are some key things to look out for with a broker:
Check the spread of your broker. If for any of the main currency pairs, spreads are more than 4 pips, this is something, you might want to reconsider. During news times, brokers often raise their spread even more making it more difficult to make money. In short, if your broker has a 10 pip spread on GBP/USD, the market has to move 10 pips in your chosen direction(whether buy or sell: whichever you chose) for you to just break even at 0.00! That is actually a lot. To deal with the issue of spread, it is strongly suggested that you use an ECN broker who often have little to no spread but charge a fixed commission on each trade. Most brokers we know of, have an ECN option.
Making sure that your brokers platform is STABLE and connected to market data is extremely important. During news times a “slimy” broker will freeze their platform so that you do not trade or trade intentionally making mistakes. They may also not change their price feeds on time.
Slippage is a very frustrating issue for traders although with modern technology, its less of a problem as the dealings are mostly automated. A broker with a “Dealing Desk”, has real people behind your trade and if the broker does not want to fill you in the trade at the price you want, they will deny your request and offer you a different price. Placing Pending orders is a good way to deal with this problem. All in all, it is strongly suggested that you make sure that your broker is not known for slipping your trades.
The time it takes for your trade to get taken after you click Buy or Sell is critical. There should be almost no delay. Watch out for brokers who take several seconds to execute your trade at a price 5 pips away or more from the price you wanted. Another dirty trick brokers do is totally not execute your trade when you click buy or sell. Then when you click buy or sell again, twice or even four times more, suddenly 10 seconds later, you are in 5 trades! Always check that your trades are being taken efficiently.
A broker SHOULD have 24/5 live chat support, prompt e-mail responses, and good communication skills. They should be knowledgeable about the forex market and able to help you when you need it. If a broker does not have Live Chat support, it does not necessarily mean they are bad however it’s something to note as a good requirement.
The most important thing in trading is getting your money which you have spent countless hours and hard work making. A good broker should honor your withdrawal as soon as possible. There should be ZERO issues with this. If a broker denies your withdrawal request, this is unacceptable and should be treated as a fraud case. It is your money, you have the right to get it!