forex

Introduction

The following is a list of questions you may like to ask yourself, your broker and other traders about a particular firm you have in mind. You can use this checklist to narrow down your selection of forex companies to fit your requirements.

1. Word of Mouth

• What do other traders say about the broker?
• What is their customer service/dealing desk like?

2. Safety of Funds

• Is the broker regulated?
• What regulatory organisation are they registered with and what protections does this afford you?
• Are client funds insured against fraud at the firm?
• Are client funds insured against bankruptcy of the firm?

3. Execution

• What business model do they operate? i.e. Market Maker, ECN or NDD?
• How fast is their order execution?
• Are orders manually or automatically executed?
• What is the maximum trade size before you are put on manual execution?
• Are all clients trades offset?

4. Spread

• How tight is the spread?
• Is it fixed or variable?
• Is it larger for mini accounts?

5. Slippage

• How much slippage can be expected in normal and fast moving markets?

6. Margin

• What is the margin requirement? e.g. 0.25% (max 400:1 leverage), 0.5% (max 200:1 leverage), 1% (max 100:1 leverage), 2% (max 50:1 leverage), etc.
• Does it change for different currency pairs or days of the week?
• Is it the same for standard and mini accounts?

7. Commissions

• Do they charge commissions? (Most market makers commissions are built into the spread, whereas ECN's charge a small fee)

8. Rollover Policy

• Is there a minimum margin requirement in order to earn rollover interest?
• What other requirements or conditions are there for earning rollover interest?

9. Trading Platform

• How reliable is it during fast moving markets and news announcements?
• How many different currency pairs can you trade?
• Do they offer an Application Programming Interface (API) for automated trading systems?
• Does it offer any other special features? (e.g. One click dealing, trading from the chart, trailing stops, mobile trading etc.)

10. Trading Account

• What is the minimum account opening balance?
• What is the minimum trade size?
• Can you adjust the standard lot size traded?
• Can you earn interest on unused equity in your account?