A necessary part of preparing to trade is choosing a Forex broker, who will help facilitate the trading activity in your account. However, with so many to choose from how can you know who the best Forex brokers are?
There isn’t a simple answer to this question because not every broker offers clients the exact same thing. There are many differences in their execution styles, trading platforms offered, leverage options, spread costs and funding requirements to name a few.

With the recent influx of retail Forex traders entering the market, the options these traders have when picking a broker have increased substantially over the last number of years. Before the retail market explosion, the brokers were usually limited to larger institutions, and it was difficult to participate if you were an individual.

Now due to the convenience of online trading technology, anyone can access the global Forex market. However, such explosive growth has resulted in many new brokerages popping up every year, as many have wanted a piece of the action.

In your quest to find the best Forex broker, you should fully understand everything a particular broker has to offer, and if that meets your requirements for trading. Also, everyone wants to know that their money is safe, and therefore you may want to consider looking into their capitalization and regulatory bodies. Some brokers may also offer insurance on deposits. FXCM for example recently announced that all deposit amounts are insured 100% through Bank of America’s FDIC program.

If you are new to Forex and do not fully understand the role of a broker, it is basically an intermediary that connects you to liquidity providers in the market and helps facilitate buying and selling in your account. The broker receives a commission for each open/closed trade, which is also knows as the spread between the bid/ask price for each currency pair.

The liquidity providers, such as banks and large financial institutions provide the margin need to trade Forex using leverage. In your search for the best Forex brokers, liquidity should be something you should look into. You want to make sure that the broker has solid relationships with multiple institutions, so that liquidity is never a problem.

You may also want to consider the execution model of each particular broker. A no-dealing-desk broker is probably the best choice due to the fast that they don’t act as market maker, which can act contrary to the traders’ best interest. Market makers have been known to trade against clients, meaning that when the trader loses, the broker wins. Obviously this poses a serious problem to the trader, as trust can quickly be undermined if the trader believes these types of antics are occurring. A no-dealing-desk broker, such as FXCM, simply facilitates buying and selling and works in the best interest of the client. The NDD broker only makes money from the spread cost, and will never trade against a client.

You will also want to consider what forex trading platform you will want to use. If you will be using an automated trading system with an Expert Advisor (EA), you will need to make sure that the broker offers MetaTrader 4. If you will be trading manually, you should consider the platforms offered, for their ease of use, execution, and features.

Once you have found what you consider to be the best Forex broker, the first step is to fill out the online application for a new account. Once you have been approved you will be given instructions on how to fund the account. After your funds have been received your account will be activated and you will be notified with information on how to get started trading. This process usually takes around 2-5 business days, depending on the broker and the method of funding you use.

It is also important to note that if you will be affected by the new FIFO and hedging rules instigated by the NFA, you will want to make sure that you pick a broker that isn’t affected by these rules. Some brokers have found a workaround with these rules, while others have not.

As you can see there are many factors involved in find the best Forex brokers, and it is largely dependent on each individual traders needs. Regardless, it is crucial that you be well-informed and have had all your questions answered before making the decision to join a specific broker. By doing your proper due diligence, your chances of being disappointed or unhappy with your choice will be greatly diminished.

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