Chosing a Forex Broker | Tips for Choosing a Forex Broker

When searching for a Forex broker to facilitate your trading there are a number of important factors to consider.

• Be certain that they are a registered financial concern based in their country of origin. There are many brokers who operate out of the major cities of large countries; but are registered in some small obscure country whose financial laws are inadequate to protect traders. Lodging a complaint with financial regulators in their city of origin will not help as they are not regulated by that country.

In the United States the Forex market is regulated by NFA and CFTC and by logging on to http://www.nfa.futures.org/basicnet/ we can obtain the facts about the Forex Company. We can search for the firm by name to ascertain if there have been or are any pending complaints against the firm.

Recently the NFA have instituted changes that have had a detrimental effect on our ability to trade the market successfully.

1. These changes affect the placing of market orders like one cancels the other (OCO) used to bracket a trade.
2. Certain contingent orders like stop losses and limit orders will be affected by the new FIFO rules.
3. Hedging a strategy used to trade the same currency pair both long and short has been completely outlawed.

These new regulations have made it more difficult for traders to control risk and place pending orders.

Some brokers have instituted temporary measures or fabricated solutions which could back fire against them.

Others have simply instituted the changes to the detriment of their clients, whilst many have recommended that their clients move their funds to a reputable offshore broker regulated by European or British financial authorities.

Until these archaic and draconian measures have been removed by the NFA it will not be possible to recommend any of the US Brokers
.

• We also need to check the net reserves of potential brokers as client funds are not always protected in the event of insolvency.
• There are many websites dedicated to monitoring the activities of the numerous forex brokers world wide. A check on one of these sites can help ascertain whether your potential broker has a good reputation or not.
• A word of caution here, there are few if any Forex brokers who do not have allegations of misconduct posted on these websites. Many of the complaints are posted by reckless, unsophisticated, uneducated or malicious traders.

Whilst there is no doubt there are certain brokers who are charlatans and crooks, simply out to relieve the unwary public of their hard earned cash there are also reputable brokers who offer a good service to traders with fair and honest dealings who are slated by traders who lose their money.


These are some of the factors necessary to consider when opening an account with a Forex Broker.