#12: How to Choose a Forex Broker
How to select a Forex broker
The last thing that I want to talk about is how to select a Forex broker.
Because this is one of the most common questions that I get from traders.
"Hey, Rayner, which Forex broker do you recommend. I've been scammed so many times. I'm so scared. What should I do? Who should I go with?"
So, I'm going to share with you a few guidelines that you should take into consideration when you are selecting a Forex broker.
Again, there is no guarantee that you will be 100% completely safe.
But if you follow these guidelines, I would say your odds are pretty good that you are with someone that you can trust!
So, the first thing to look for is…
You want to go with a broker that is regulated.
This is pretty much common sense...
Because you want to sleep at night knowing that your broker is being regulated somewhere.
So there's some authority that is actually watching over the broker.
In Singapore, brokers that want to operate here are regulated by the Monetary Authority Singapore (MAS).
And the MAS is strict because they don't just say “Tom, Dick, and Harry come here and set up a Forex brokerage account.”
So, I feel safe already knowing that the MAS gave them the green light to operate.
The second thing to consider is…
You want to check out how your broker executes your trades.
Compared to other brokers, Is there a lag time every time you put on a trade?
Or before major news releases, does your broker widen spreads bigger than the other brokers?
Because if your spread widens above the average and you happen to be in the trade, you may get stopped out with your broker.
Whereas, on other brokers, you may still be in the trade.
So again, pay attention to the execution and pay attention to how the spreads move around just before a major news release!
The third thing is…
They'll be times where you are wondering, "Hey, why did this happen."
You want to talk to someone and you don't want to email and wait 48 hours for a reply because your money is on the line!
You want to have customer service that offers a live chat support.
I would say most brokers offer live chat support.
Another thing to pay attention to is…
Ease of withdrawal
Let's say your making money and you want to withdraw money from your account.
This should be pretty seamless as well.
I would say three to five business days is quite a norm.
You don't want to get a broker that gives you excuses why your money cannot be transferred.
Bank issues, whatever issues, technological issues, you don't want to hear that.
You want to get your money within 3 to 5 working days.
That's about it.
Ease of withdrawal.
If your broker gives you stories, excuses, reasons, on why your money is delayed, why you should top up to claim some weird bonus...
That is a red flag.
So, ease of withdrawal should be seamless.
How to protect yourself from bad Forex brokers
There will be times where you feel unjust when something happens to you.
Maybe it's your broker fault, maybe it's your fault.
I don't know, but, how can you protect yourself from these types of issues that could happen?
Maybe you get stuck out of your trade and you realized, "Hey, it's not my fault, why did the broker stop me off my trade?”
So, what you can do is to record and screen capture your trade size.
By that I mean record everything and screen capture your charts.
The level that you entered, the price that you got hit out of your stops.
Record it and also try to compare the price with another broker.
Let's say on broker A, you got stopped out.
But on broker B, the spike didn't hit that level.
So the market didn't hit that level on broker B.
You’re going to compare or rather save both charts so you can have a case for argument later on when you need to present your case!
Once you have all this information and you kind of feel that, "hey, it's really not my fault."
What you can do is take this evidence and whatever data that you have.
And you can go to social media and share it on there.
But first, what you want to do is go to your broker and ask for a reason.
You don't want to just smack them up on a website even before not speaking to them about it.
If your broker does not give you satisfactory reason, then go to social media, use the power of congregation of people on Facebook.
If they see that messages, they help you share, it's going to hurt your broker's reputation and chances are your broker may not come back to you and try to make amends.
And maybe refund you whatever losses that you may have if it’s really their fault.
So, sharing on social media is really powerful because now the power is in your hands as a consumer.
For example, I have one on Tradingwithrayner with a Facebook group on it.
Or go to other popular trading Facebook groups and share it on there.
People will be likely to help you because after all, we're all in this together.
Another thing you can do is to bring up to the authorities.
So, for example, in Singapore, the brokers here are regulated by MAS, Monetary Authority Singapore!
Whenever someone goes to M.A.S and say, "Hey, this broker is doing something to me and I feel it is unfair."
What the M.A.S will do is they'll impose a fee on the broker just for this case that is opening up.
So, this is a cost to the broker because even if the broker did nothing wrong, there is a cost they have to answer to.
What the broker will most likely do more often than not, is that, if your losses are smaller than the cost that is to be incurred on them, they'll just waive whatever loss that you have suffered.
This may change in the future so depending on when you are watching this video, this may change in the future.
But bringing it up to the authorities does help.
Especially if you feel that "Hey, it's something that's unethical or you didn't deserve it or whatever."
Bring it up to the authorities and see if they can help you look into it.
So, that's how you can go about protecting yourself from your illegal or unethical brokers out there!
- Make sure that your broker is regulated in whichever country you’re in.
- Execution should be pretty much smooth. You don't want to have a system hang lack or whatever.
- Customer service should be top-notch.
- Ease of withdrawal, you put in money with them, you trust them. The money should come back in one piece.
- Record everything, compare the price feeds on different brokers. You can share on social media, bring up to your broker or even the last one is to bring it up to the authorities.