Know Your Forex Broker

Without the right forex broker, successful trading is impossible. I simply do not choose a broker just because they offers me the sun, the earth, the moon, stars and everything else. I cherry-pick them.

I establish business relation with my brokers based on the following criteria viz:

Offers me flexible option to choose my own leverage such as: 1:100, 1:200, and 1:400.

Offers hedging features, i.e. I can take EUR/USD long and short at the same time.

When I hedge, opening two positions requires margin for only one position, i.e. free margin trade in the second position.

Offers low spreads, usually between 1-3 pips spread and not more on major currency pair.

Offers customer support based in the U.S.A 24/7 for U.S. clients.

Offers variety of trading resources such as charts, news, fundamental and technical analysis tools free of charge.

Offers no slippage trading during fundamental news breakout. If you are going to trade news and fundamental announcement it's imperative that you verify slippage policy with the broker of your choice.

Offers NO Dealing Desk Execution, i.e. does not take opposite side of my trade.

Offers high speed platform with minimal errors.

Offers platform that conspicuously displays my account balance, equity, profit and loss, used margin, usable margin, usable margin percentage.

Does not restrict me with first in first out rule (FIFO).

The first step before opening a real live account, also known as money account, is to start a demo account. During this phase, you might want to test how brokers handle customer service besides all other offers mentioned above.

When I was cherry picking the right broker out of the pools of many brokers, I called the customer service and asked several genuine questions that a newbie would generally ask.

Then I would rate the customer service in the scale of 1-10. I would do same for other forex brokers in my lists. And then I would pick one or two.

Understand though, brokers are busy. I do not waste my time and their time for unnecessary conversations. I strictly keep it as a business and to the point for the sake of professional courtesy.

Make sure that you verify with your broker all above offers, except for the last one, FIFO rule.

If you choose to open account with the U.S. based broker then the chances are all the U.S. based brokers are obliged to follow FIFO rule.

The FIFO rule implies if you have two positions opened say one at 1:00 am and another at 2:00 am on same currency say, EURUSD, then you can not close the order that was opened at 2:00 am without first closing the order opened at 1:00 am.

So when you make that call, ask if your broker has branches in other country where FIFO rule is not followed. FIFO rule applies only to the U.S. based brokers so far.