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If you are already trading forex for a while, it is likely that you are fully aware that choosing the right broker is extremely important for long-term successful trading.
However, the fact is that there are hundreds of forex brokers around the world. The question, then, is how to recognize that your broker is most probably not providing you with the best services in your favor, or on the other hand if the broker is a fair and trustworthy partner for your forex trading.
Below we have prepared a simple list of differences between poor-quality and high-quality brokers that should help you to get a better view of your current broker.
POOR-QUALITY BROKERS
HIGH-QUALITY BROKERS*
Aren't regulated by any authority
Are regulated by trustworthy authorities like CySEC, FCA, BaFin and others
Don't segregate company's funds and deposits of traders
Segregate company's funds and deposits of traders, which should secure the safety of your whole deposited amount
Place deposits of clients in partner banks and don't link them with clients’ own names
Place deposits of clients in its partner bank and link them with clients’ own names
Have slow orders execution and trading servers, the trading platform often freezes or will show requotes
You should not experience any of these with a high-quality broker
Have limits for placing orders from actual price
No limits for placing orders
Have maximum volume of orders up to 20, 50 or 100 lots only
Have maximum volume of orders up to 1000 lots
Restrict maximum deposit that you can make on a given account. In case of higher deposit, you have to switch to another account
Should have no such restrictions
Have conflicts of interests with traders and are interested in traders’ losses, which is a profit for low-quality brokers (market makers as well as some “ECN / STP” brokers)
Should have no conflicts of interests, are true ECN / STP brokers and earn profits from spreads / commissions only – are interested in long-term profitable clients
Have one or a few low-quality liquidity providers
Should have TIER1 high-quality interbank liquidity providers
Have instant – market maker – orders execution
Should have true interbank market orders execution
Have negative asymmetric slippage
Should have both positive and negative slippage (simply compare your SL / TP price and executed price in MT4's terminal)
Are widening spread often
Aren't widening spread except extreme situations in the market
Have huge financial leverage such as 1:400 or above
Have maximum financial leverage up to 1:200
Have fixed spreads
Have solely variable spreads
Guarantee limit orders
Don't guarantee limit orders as limit orders can be a subject to positive slippage in favor of traders
Offer % deposit bonuses that are not withdrawable
Don't have % deposit bonuses
Have inactivity, maintenance or data fees
Have no “unjustified” fees
* These are characteristics that quality regulated brokers could have while this may not always be the case and characteristics may vary.
We firmly believe that the list above will give you a better overview of how reliable vs. unreliable brokers should behave toward their clients.
We will be also very happy if you will share your real experience with brokers with us and help other traders in choosing the right broker for their trading.
As Purple Trading, the world's leading forex broker, we also strive to provide 100% fair forex trading services in favor of our clients and prepare a high-quality trading environment where forex traders are able to succeed in the long-term.
About the Author
Team Purple Trading
Purple Trading is a true and 100% fair ECN / STP forex broker providing direct access to the real market. High speed orders execution, no trade-offs, no limits for any type of trading, the most advanced trading technologies. Explore more about Purple Trading at www.purple-trading.com .
For more information on the risks of trading, click here .
P.M. Purple Trading is a trade name owned and operated by L.F. Investment Limited., 11, Louki Akrita, CY-4044 Limassol, Cyprus, a licensed Cyprus Investment Firm regulated by the CySEC lic. no. 271/15.
