Chapter 8

Selecting a FOREX Broker


All FOREX at the retail level—and almost all at the institutional level—is conducted online. The good old days of calling a broker to place an order, squawk boxes, and the comforting din of clacker board quote machines is, for better or for worse, on the scrapheap of history.

The emergence of third-party trading platforms has lowered the list of broker requirements dramatically since the first edition of Getting Started in Currency Trading. The efficient process for most traders is now to find the right trading platform and then move on to finding a broker who supports it.

In selecting a FOREX broker today, your wish list should look like this:

ECN or Market Maker
Costs—Spreads, Lot Fees, Rollovers
Liquidity Providers
Customer Service
Trading Pair Palette
Financial Stability
Mechanism for Complaint and Issue Resolution
Account Options
Games Brokers Play
Deposits and Withdrawals

While regulation has indeed increased, it remains much less robust than it is in either the securities or commodity futures industries. FOREX has no central clearinghouse, making it a substantially different space from commodity futures or listed securities. Prospective traders need to understand the differences and ramifications when selecting a FOREX broker. The higher the technology level, the lower the redundancy in the system. This means a small error can be very costly and critical information can be easily lost in the flow.

Tip: Keep records of all ...

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