Similarly to CFDs, there is a huge amount of Forex brokers in the World to choose from.
So, what broker should we choose?
Choosing Forex Broker
First of all, and as a very important fact, we should choose a full regulated broker in any of the developed countries in the World. That means, at least, that its offices are in one of the major developed countries, like United Kingdom, United States, Australia, Canada, Germany, France, Spain, Hong Kong, Singapore, Japan, etcetera.
Although, brokers regulated by the British FCA, Australian ASIC or American NFA are the best choice.
However, even if the broker we choose is regulated, that does not mean that there will be no problems for sure.
There will always be problems or complains: bankruptcies, small trading issues, bad conditions of trading, slow withdrawal processes, etcetera.
Therefore, our first priority in this respect is: broker regulation.
For instance, if the broker is regulated only by the British Virgin Islands regulator, it is probably a good idea not to open an account there.
That does not mean that the broker is a scam but the probability that we get problems is higher than in the other cases.
Choosing the best Forex broker
Another point we should keep in mind is how much money we have to deposit.
Virtually all Forex brokers in the World accept accounts of every size.
Many of the retail brokers offer the possibility to open accounts with as low as 1, 100, 500 or 1.000 dollars, pounds or euros, and also the chance to trade in micro lots (0.01 lot).
Besides, there are other brokers, like Interactive Brokers, that require bigger deposit amounts, like 10.000 dollars.
For more sophisticated traders there are other possibilities like institutional brokers that offer hotspot, FXall, Currenex and that kind of platforms.
One question that seems to be priority number one in many traders is that of the broker being a market maker or an ECN.
Choosing an ECN Broker
If you are a small retail trader I do not think that this issue is very important, because no matter what broker, ECN or Market Maker, most novice traders will lose anyway.
When our account is much bigger, perhaps it is advisable to choose an ECN broker.
In other words, if you have a 1.000 dollars account, you should not worry too much about it.
Other question is if the trader has 200.000 dollars or pounds account and start winning consistently.
In such a case, we should try to go to an ECN broker, although not any ECN broker, but to an institutional one. For instance, look for one in the London market in UK.
However, there are good market maker brokers that have as good reputation as any other ECN broker out there. For instance, Oanda.
Choose a broker for Forex
However, it is always good to try to do trading in ECN brokers, like Admiral Markets, IG Markets, Darwinex, Axitrader, etcetera.
Once we have searched for some possible candidates, we should consider points like spreads, swaps and other trading conditions.
For instance, it will be better a broker where we can trade micro lots of 1.000 units than one that only allow us to trade 100.000 units lots, especially if our account is not very big.
Last but not least, always remember that Forex trading is very difficult, and not many people are capable to win there in the long run, what is more, just a few are capable of doing so.
In this respect, it is a much more difficult type of trading than stocks trading, because the latter have a long term trend much more defined than Forex: that is a bull trend.
That is why traders in stocks are more likely to be successful than traders in Forex.
Nonetheless, this does not mean that it is easy to win in stocks and impossible to win in Forex. Neither of the two.
A common advice for all traders would be that they had better not do day trading, but focus more in week or “month trading”, so to speak.
When you do frequent day trading, the one more likely to get huge and quick profits is the broker, whether it is ECN, Market Maker, regulated or not regulated.
The broker will get the benefit in most cases, with just a few exceptions.
Greetings and good trading.