Wri​tten by: by Pa​na​gio​tis Cha​ra​la​mpous, Head of Co​mmu​ni​ty Ma​na​ge​ment of cT​ra​der at Spo​twa​re

Se​le​cting the ri​g​ht bro​ker is one of the fi​r​st and most impo​r​tant de​ci​sions a tra​der has to go th​rou​gh. The​re are hun​d​re​ds of bro​kers out the​re, and ma​king the best choi​ce is not alwa​ys so easy. One nee​ds to con​si​der seve​ral pa​ra​me​ters and the se​le​ction pro​ce​ss be​co​mes a non-trivial task. As a re​su​lt, the​re are also nu​me​rous ar​ti​cles that hi​g​hli​g​ht what you shou​ld be awa​re of du​ring the se​le​ction. In this ar​ti​cle, I try to avoid re​pea​ting what has al​rea​dy been wri​tten and just add my per​so​nal tips to this pro​ce​ss.

Che​ck Re​gu​la​tion

The fi​r​st advi​ce you will get when loo​king for a bro​ker is to che​ck the re​gu​la​tion. I also con​si​der re​gu​la​tion the most impo​r​tant aspe​ct to look for when sc​ru​ti​ni​zing a bro​ker. You need to en​su​re your in​te​re​sts will be pro​te​cted in case so​me​thing goes wrong. Lack of re​gu​la​tion or weak re​gu​la​tion shou​ld be con​si​de​red a red flag for any bro​ker. You shou​ld alwa​ys choo​se bro​kers re​gu​la​ted un​der re​pu​ta​ble ju​ri​sdi​ctions. On top of that, my per​so​nal advi​ce is to pre​fer bro​kers that are geo​g​ra​phi​ca​lly clo​se or even ba​sed in the same coun​try as you. If for exa​mple, you re​si​de in the UK, choo​se an FCA re​gu​la​ted bro​ker ra​ther than an ASIC even thou​gh both re​gu​la​to​ry bo​dies are re​spe​cted equa​lly. In the case so​me​thing is me​ssed up, it will be much ea​sier to seek le​gal advi​ce and push for le​gal pro​ce​du​res in your own coun​try ra​ther than ab​road. You don’t want to have to travel ab​road in case of di​spu​tes.

Tip: If the bro​ker is lo​cal then it is ea​sier to ga​ther some in​si​der in​fo​r​ma​tion too. Make sure they have offi​ces and that the​re are peo​ple wo​r​king the​re. Look around for peo​ple you know that mi​g​ht be wo​r​king the​re and find out how things are going.

Che​ck Bro​ker’s Hi​sto​ry

Whi​le a st​rong re​gu​la​tion mi​g​ht pro​te​ct your in​te​re​sts, you do not rea​lly want to mess up with a bro​ker that has a hi​sto​ry of di​spu​tes in the fi​r​st pla​ce. So it is wise to che​ck your bro​ker’s re​co​rd be​fo​re en​ga​ging in a re​la​tion​ship with them.

*Tip: Go to Goo​g​le and sea​r​ch your bro​ker’s name along​si​de with re​levant key ter​ms like “fi​ned”. You will be imp​re​ssed by how many re​pu​ta​ble bro​kers have le​gal and re​gu​la​to​ry trou​bles. *

Che​ck Revie​ws

Che​ck the bro​ker’s revie​ws in va​rious re​pu​ta​ble si​tes. Don’t sti​ck to a si​mple star ra​ting but read ca​re​fu​lly why peo​ple are ha​ppy or not about a bro​ker. See how the bro​ker ma​na​ges his on​li​ne re​pu​ta​tion and how bad revie​ws are ma​na​ged and re​spon​ded. Make your own ju​d​ge​ment if bad revie​ws are ba​sed on so​lid ar​gu​men​ts or if it is just de​fa​ma​tion atte​mpts or even un​ju​sti​fied clai​ms by tra​ders that lost mo​ney.

Tip: Post a fake review so​me​whe​re. See if they re​ply and if they care about cu​sto​mer fee​dba​ck.

Che​ck Tra​ding Co​sts

Tra​ding co​sts are also an impo​r​tant fa​ctor to con​si​der. They cou​ld affe​ct your st​ra​te​gy si​g​ni​fi​can​tly, and even de​ci​de if your st​ra​te​gy is pro​fi​ta​ble or not. The tip here is to look be​hind the adver​ti​sed co​sts. “Co​mmi​ssions from”  and “Sp​rea​ds from” don’t rea​lly say the tru​th. The​se are usua​lly EUR/USD co​sts, but they mi​g​ht be very di​ffe​rent for the in​st​ru​ment you want to tra​de, espe​cia​lly if it be​longs to a di​ffe​rent asset cla​ss.

Be​si​des co​mmi​ssions and sp​rea​ds, you shou​ld also che​ck for other hi​dden co​sts like swa​ps and sli​ppa​ge. If you are a long term tra​der, swa​ps mi​g​ht si​g​ni​fi​can​tly affe​ct your po​si​tions, and if you are tra​ding big vo​lu​mes, sli​ppa​ge mi​g​ht cost you a lot.

Tip: Tra​de some big vo​lu​mes on a demo account. Che​ck if tra​des take de​pth of the ma​r​ket into account, and what the sli​ppa​ge is. Also mo​ni​tor a few over​ni​g​ht po​si​tions. Che​ck when the bro​ker chan​ges swa​ps and co​mpa​re them with co​mpe​ti​to​rs.

Che​ck De​po​si​ts/Wi​thd​ra​wa​ls

Make sure that the de​po​sit and wi​thd​ra​wal pro​ce​ss is as fluent as po​ssi​ble. It is not enou​gh to just have seve​ral de​po​sit and wi​thd​ra​wal me​tho​ds – the ope​ra​tions shou​ld also be exe​cu​ted on time. You don’t want to won​der why you can​not wi​thd​raw from your account, how many days will pass be​fo​re you see the mo​ney in your bank account, or why the bank is blo​cking the tran​sa​ction. Also, the​re will be ca​ses, whe​re you will need to de​po​sit fun​ds into your account imme​dia​te​ly e.g. to avoid a stop out. You want this pro​ce​ss to be as effi​cient as po​ssi​ble.

*Tip: Be​fo​re en​ga​ging into any tra​ding with the bro​ker, de​po​sit and wi​thd​raw an amount to make sure the who​le ci​r​cle is wo​r​king fla​wle​ssly. *

Che​ck Su​ppo​rt

Su​ppo​rt is ano​ther cri​ti​cal fa​ctor to con​si​der. Whi​le a bro​ker mi​g​ht claim to provi​de 24/7 su​ppo​rt over many lan​gua​ges and di​ffe​rent chan​ne​ls, the most impo​r​tant aspe​ct is to be su​ppo​r​ted by kno​wle​d​gea​ble sta​ff. It doe​sn’t rea​lly ma​tter if the per​son that su​ppo​r​ts you re​spon​ds imme​dia​te​ly in your lan​gua​ge, if all that you get is a can​ned re​ply that does not re​so​lve your issue or isn’t of much help an​yway.

Tip: Che​ck on the bro​ker’s su​ppo​rt with some trap que​stions for whi​ch you know the an​swers. Eva​lua​te the qua​li​ty of re​spon​ses.

Che​ck Te​ch​no​lo​gy

The te​ch​no​lo​gy your bro​ker offers, e.g. tra​ding pla​tfo​rm, client area, pa​yment me​tho​ds, etc. is also of ma​jor impo​r​tan​ce. You shou​ld alwa​ys en​ga​ge with a bro​ker that offers a te​ch​no​lo​gy you tru​st and un​der​stand.

Tip*:** If a bro​ker’s te​ch​no​lo​gy see​ms in​fe​rior to the co​mpe​ti​tion e.g. an un​k​no​wn tra​ding pla​tfo​rm, think twi​ce be​fo​re ope​ning an account. Di​spu​tes over te​ch​no​lo​gy gli​tches are not easy to han​dle, and you do not rea​lly want to go th​rou​gh them in the fi​r​st pla​ce.  *

If you are a tra​der wi​shing to up your tra​ding game with a cT​ra​der bro​ker, you can view our our list of fea​tu​red cT​ra​der bro​kers and Prop Fi​r​ms.

If you are a bro​ker wi​shing to in​c​rea​se ma​r​ket sha​re, or po​ten​tia​lly sta​rt a bro​ke​ra​ge from sc​ra​tch, you can do so by con​ta​cting us and joi​ning the ever-gro​wing co​mmu​ni​ty of cT​ra​der bro​kers around the wo​r​ld.

Con​ta​ct Us