If you have looked into trading you will have no doubt seen the large number of forex brokers out there. It is a fiercely competitive business and they all want your money. Competition is often a good thing as it often results in lower costs and better service. This is all good, but how can we be sure we pick the right broker? Let’s take a look.

Forex Brokers List

Here is a list of some of the popular Forex Brokers:

Broker	Min. Deposit	Leverage	MetaTrader 4 Platform	Commissions	Muslim Accounts	Min. Trade Size
FXOpen	$1	1:500	Yes	None	Yes	1,000 units
EToro	$1	1:400	No	None	Yes	1,000 units
InstaForex	$1	1:500	Yes	None	Yes	1,000 units
Dukascopy	$1,000	1:100	No	$0.50-$3.60 per $100,000 traded	Yes	100,000 units
Forex.com	$250	1:200	No	$0	Yes	1,000 units
FXCM	$300	1:200	Yes	$0	Yes	10,000 units
FXDD	$500	1:200	Yes	$0	Yes	1,000 units
FXPROs	$250	500:1	Yes	$0	Yes	10,000 units
IBFX.com	$250	200:1	Yes	$0	Yes	10,000 units

FXOpen

FXOpen have grown into one of the largest meta trader forex brokers in recent years. They provide both micro, mini and standard trading accounts. They also offer islamic accounts that do not pay or charge interest. They offer the popular metatrader 4 platform.

They offer competitive spreads and experienced support. They also have a variety of bonus' for new clients. FXOpen also offer ECN (Electronic Communication Network) execution through the Metatrader platform.

Click here to open an account with FXOpen.

EToro

EToro offers traders something a little different. Etoro is undoubtedly one of the best forex brokers for the new trader and has made getting started extremely easy, with a very easy to use trading platform.

One big advantage of EToro is they offer many bonus' to new account holders. They will give you up to 25% extra funds in your account after your first deposit. The bonus is credited immediately after you make your first deposit.

Click here to Open an account with EToro

Which online Forex broker is best for me?

This is a difficult question to answer. It often depends on your trading strategy. For example if you want to employ a forex scalping strategy, the spread is likely to be the most important factor. If you are looking to make carry trades, then the swap paid by your FX broker is likely to be very important. Let's look at the important factors below in more detail:

Spreads

The spreads you pay when trading will inevitably affect your overall performance. Some trading strategies require lower spreads much more so than others, a good example of this would be scalping. Also, not all forex brokerages are commission free. So you may have to factor in commission charges with some brokers.

Execution

The speed of execution of your trades varies between brokers. The best forex brokers all have good execution. It’s certainly a point worth considering because if a company A offers a 4 pip spread on GBP/USD with no slippage and company B offers a 3 pip spread but on average slips 2 pips against each trade, you will end up paying less with company A.

Another thing to consider is that demo trading accounts and live trading accounts are often very different in terms of execution, especially during times of high volatility (e.g. 10 seconds after the non-farm payroll is released).

Retail Brokers

These firms trade against their clients. What this means is, if Fred wanted to buy, the retail firm would sell the position. Conversely if Fred wanted to sell the firm would buy. The retail firm will then cover the position with their liquidity provider or may even just hold the position in-house knowing that most traders lose. If they were to opt for the second option, the retail firm would end up profiting from your losses. I have heard many comments from successful traders who have actually been asked to take their business elseware as they were costing the FX broker too much!

ECN Forex Brokers

These brokers work differently to retail brokers. They do not trade against their clients like retail brokers. When you place a buy market order with one of these firms, they will process the order by matching it with a seller. The spreads are often lower with ECN brokers, but they usually charge commissions for matching your order.

Cost Of Carry

This is highly significant if you are looking at making carry trades. This is shown in the "swap" category in metatrader 4 forex brokers. It is the amount charged or earned on a position held over night due to the difference in interest rates between the two currencies traded.

For example if the Bank rate was 5% in Australia and 0.5% in Japan, holding a long AUD/JPY would earn positive swap. Conversely a short would earn negative swap.

Unfortunately some brokers don't pay you quite as much swap as they should do, and as you might have guessed they are always happy to charge you the full rate on negative swap positions.

Regulation and profitability

It is very important to choose a broker that is profitable. This is very important because the more profitable the broker is the less likely they are to go bankrupt and they will be in a position to offer better customer support. To find out the capitalization for a broker, you can visit www.cftc.gov and go to the “financial reports for FCNs” section. This link will tell you how well capitalized your broker is. Generally, the better capitalization the better as it suggests they have more clients. It is also extremely important to chose a broker that is licensed and regulated by one of the major regulating authorities in the world such as the United States, United Kingdom, Australia, etc.

Unregulated offshore forex brokerage firms may seem appealing from a privacy point of view, but your position could be precarious if the broker was to act fraudulently or go bankrupt. Another point to look at is the length of time a firm has been in business. I would suggest opting for one that has been around at least five years, the longer the better.