The Best Forex Broker – What Should You Look For When Choosing A Forex Broker

Just like finding a trading robot, finding the best Forex broker can be very difficult. Even finding a good one can be a real pain in the you-know-where. There are brokers in the world who will treat you well, be happy to earn commissions off of your trades, and facilitate your ability to make money. There are some other ones that will bleed you dry at every opportunity and leave you broke and cursing them. So let’s see what I can teach you about finding the best Forex broker.

What are Forex brokers anyway?

Forex brokers are the companies with which you make your Forex trades. You open your account with them, make your deposit, and buy and sell with them. They’re trading posts, where people come together to buy and sell each others’ currencies.

Where do these brokers get their prices from?

The prices for Forex brokers are provided by what are called liquidity providers. These are companies organized and funded by the biggest banks in the world, and serve as Forex exchanges where gigantic sums of money are moved around, bought and sold. They provide the prices by which Forex brokers operate.

What kind of brokers should I avoid like the plague?

There is a certain kind of broker that you need to be very, very careful of. These are called Dealing Desk brokers. These guys do what’s called “making the market.” This is basically exactly what it sounds like. When you go to them, you’re not having your trades routed to the Forex market as a whole (meaning those liquidity providers I mentioned), you’re actually buying or selling directly from them. They’re actually competing directly against you. When you buy, it’s from them, when you sell, it’s to them. So they have a financial incentive to screw you over as much as they possibly can.

Surely though, they can’t screw me too badly, right?

They sure can. The Forex market is massive and unregulated. There’s no SEC that’s going to swoop in and save your deposit or punish those who sucked you dry. So these Dealing Desk brokers will do just about anything to take your deposit, including some really underhanded stuff. They’ll inject non-market quotes into their system to end a winning streak you may be on. They’ll fake connection problems to interfere with your trades. They’ll do just about anything they can to make you lose all your money, because it all ends up right in their pockets.

Wow, so what kind of broker should I be looking for then?

What you want to find are what are called NDD/ECN/STP brokers. The NDD part is easy to explain, it means they don’t have a dealing desk. They’re not competing against you. This right there is important because it means their only incentive is that you trade as much as possible, because they’re making their money from commissions you’re paying them with each trade. They have no financial reason to want you to lose all your money. ECN stands for Electronic Communications Network. This means they have a network on their system that allows their clients to interact with each other. So if I want to buy a currency, and there’s someone on their system looking to sell that currency at the right price, then that transaction is completed right there, with the broker taking commissions. Nothing underhanded going on with that. STP means Straight Through Processing. This lets you know that the broker has a direct connection with the liquidity providers. You see, in order for you and me to open an account with a liquidity provider, we’d need a massive initial investment, hundreds of thousands of dollars. So the brokers will aggregate a lot of smaller orders together and send them through to the liquidity provider for you. Again, this means that the only incentive for the broker is the commissions that they’ll make off of the trades. These guys are exactly what you should be looking for when you’re searching for the best Forex broker.

Good. Now that I know what to look for, how do I find it?

The internet is your friend. There are literally hundreds, if not thousands, of forums online dedicated to people talking about Forex trading. Get online, check out as many forums as you can, read what people are saying about different brokers and their experiences with them. You’ll soon learn who some of the bigger, more reputable NDD/ECN/STP brokers are, as well as which Dealing Desk brokers you need to stay the hell away from. With a little bit of foresight and research, you can avoid some of the pitfalls that wipe out the deposits of so many first-time Forex traders and find yourself the best Forex brokers. Now get yourself out there and make some money!

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  1. TUNDE
    7 years ago

    pls give me 3 names of such brokers.ie NDD/ECN/STP. THANKS


    • grvitaly
      7 years ago

      Like I said most brokers these days have all three. It’s just a matter of connecting to a different server.
      It is only up to you to give them a call and make extra sure your specific account is where you need it to be.