Which Forex Brokers Should We Use?

Since the advancement in online Forex trading, there are literally hundreds of Forex brokers available to choose from. Some say that the increase in numbers creates a healthy and competitive market but the ease of ‘getting into the broking industry’ has also attracted a few non-compliant business ventures. So, whilst a Forex broker’s online presence (website and advertising) is shiny, their work ethic could operate against the customer.In simple terms, there are three types of Forex brokers:1. Market maker – these types of Forex brokers can trade against you. For example, if you are consistently profitable, you are costing your broker money. If you cost them too much, they will take a larger position against you the next time you trade thus forcing the price to move against you on their trading platform – this is how they ‘make the market’. They can only do this on their trading platform rather than the global market. They can also change prices and spreads as they please. However, not all market makers are bad so it does pay to conduct research to make sure your account does not suffer just because you are successful.

2. ECN brokers – this is a friendly broker that has your interest at heart. They will charge you exactly the same spread and commission that they get charged by the big financial institutions that provide their prices. Your trading is safe and secure.3. STP broker – these types of Forex brokers are a mixture of the two above. They tend to work with complicated algorithms that make the market for unsuccessful traders and let the good traders continue.Whilst traders are in their Forex training stage, the task of choosing the right broker is probably at the back of their mind. However, this should not be the case. The purpose of Forex training is that traders get familiar with real market conditions. That includes price movement and the ability to operate their Forex broker’s platform. Once Forex training is over and the market conditions become ‘real’ the last thing any trader should do is start using a brand new platform. This will severely decrease their screen time and more learning time will need to be given to the new platform.

The remedy is simple. At the very start of the Forex training process traders must find a suitable Forex broker that will act in their interest in the demo and the real market environment. ECN or STP brokers should be the first choice and if other market makers are suitable then by all means, they should be added to the mix. This will ensure that no further broker research is required at the later stage when more time should be spent on trading.