Written by: by Panagiotis Charalampous, Head of Community Management of cTrader at Spotware

Selecting the right broker is one of the first and most important decisions a trader has to go through. There are hundreds of brokers out there, and making the best choice is not always so easy. One needs to consider several parameters and the selection process becomes a non-trivial task. As a result, there are also numerous articles that highlight what you should be aware of during the selection. In this article, I try to avoid repeating what has already been written and just add my personal tips to this process.

Check Regulation

The fir​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 impor​tant aspe​ct to look for when scru​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​tory 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 abroad. You don’t want to have to travel abroad in case of di​spu​tes.

Tip: If the broker is local then it is easier to gather some insider information too. Make sure they have offices and that there are people working there. Look around for people you know that might be working there and find out how things are going.

Che​ck Bro​ker’s Hi​story

Whi​le a strong 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​story of di​spu​tes in the fir​st pla​ce. So it is wise to che​ck your bro​ker’s re​cord be​fo​re en​ga​ging in a re​la​tion​ship with them.

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

Check Reviews

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 somewhere. See if they reply and if they care about customer feedback.

Check Trading Costs

Tra​ding co​sts are also an impor​tant fa​ctor to con​si​der. They cou​ld affe​ct your stra​te​gy si​g​ni​fi​can​tly, and even de​ci​de if your stra​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 “Sprea​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​stru​ment you want to tra​de, espe​cia​lly if it be​longs to a di​ffe​rent asset cla​ss.

Besides commissions and spreads, you should also check for other hidden costs like swaps and slippage. If you are a long term trader, swaps might significantly affect your positions, and if you are trading big volumes, slippage might cost you a lot.

Tip: Trade some big volumes on a demo account. Check if trades take depth of the market into account, and what the slippage is. Also monitor a few overnight positions. Check when the broker changes swaps and compare them with competitors.

Check Deposits/Withdrawals

Make sure that the de​po​sit and wi​thdra​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​thdra​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​thdraw 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​thdraw an amount to make sure the who​le cir​cle is wor​king fla​wle​ssly. *

Check Support

Su​pport 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​pport over many lan​gua​ges and di​ffe​rent chan​ne​ls, the most impor​tant aspe​ct is to be su​ppor​ted by kno​wle​d​gea​ble sta​ff. It doe​sn’t rea​lly ma​tter if the per​son that su​ppor​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​pport with some trap que​stions for whi​ch you know the an​swers. Eva​lua​te the qua​li​ty of re​spon​ses.

Check Technology

The technology your broker offers, e.g. trading platform, client area, payment methods, etc. is also of major importance. You should always engage with a broker that offers a technology you trust and understand.

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​tform, 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 throu​gh them in the fir​st pla​ce.  *

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