Forex brokers are all over the place, they all want your hard earned money, many of them want to take it from you. Even on the TV we are hit with adverts for these brokers. Due to this, we can afford to be choosey and get a great deal for our money.
It's very important when trading forex that you pick a good forex broker. For me there are four factors that are extremely important. These are:
Execution of trades - This is more important for traders who trade the small timeframes. Intraday traders and scalpers fit into this category. If a trade is not executed quickly and you get a requoted price, this can soon add up to a good number of pips, especially if it's a frequent occurrence.
Spreads - This one is self explanatory! The tighter the spreads the better. If you don't choose a broker with good spreads you could be giving too much of your potential profits to your broker. It's much better that in your pocket than your brokers, isn't it?
Profitable - I believe it is extremely important to choose a broker that is profitable. Imagine you put a big chunk of your hard earned money into a broker account only to find a few months down the line it goes bankrupt. This has happened to a few forex brokers in the past. It's a case of joining a bankruptcy queue and hoping for the best. Far better to pick a profitable broker so this doesn't happen.
Swap/Rollover - These are the rates awarded or charged for holding currency pairs overnight. They reflect the difference in interest rates between the currencies.
Forex Brokers that I have tried and reviewed:
Zecco have been around for many years. They have won many awards for their broker services. They offer 50:1 leverage, which should be more than enough and real-time quotes in 39 currency pairs. They have a great charting platform too.
Click here to join Zecco
EToro - Etoro has been around for ages. Many new traders like EToro because their trading platform is very user-friendly and makes it very easy to get started. Infact World Finance Magazine awarded them "2010 Most Innovative Trading Platform" award.
Click here to join eToro
There is no question the forex broker that you choose can have an affect on your trading results. The style of trading you do can have a big affect on which broker will be the best choice, let me explain. If the bulk of your trades are long term carry trades, that you may hold for several months or even years, then the bid/ask spread offered by the broker isn't going to be too important.
In this instance, the amount of "swap" or "rollover" the broker pays will be very important. The swap/rollover is the amount paid or charged due to the interest rate differentials between different currency pairs.
For example if the base rate in the UK was 5% and the rate in Japan was 0.5%, a long GBP/JPY position would earn interest each time it's held overnight. On the flip side, it would cost to hold a short position overnight. The swap rates charged and awarded can vary greatly between brokers.
Now let us look a different scenario, scalping. Scalping is typically where many trades are made over a short period of time. Sometimes scalp trades last only a few seconds. Clearly with this type of strategy, many trades will be made, so the bid/ask spread offered by the broker is of the highest important. Rollovers/swap rates will not be an issue as these trades are not held overnight.
So in conclusion, the broker that is best suited to you might be very different from the broker that is best suited to somebody else with a completely different trading style.