How to choose a forex broker

This guide explains how to choose a forex broker and what you should look for to find the best one. Find out about the best fee structures, why speed is important, and about the power of an economic calendar.
By:  &  Prash Raval
Updated: Jul 7, 2022

Forex brokers come in all sorts of shapes and sizes, from platforms that target retail traders to those that offer advanced professional accounts. With so many options out there, here’s a list of the top ten things to look for when you choose a forex broker.

10 things to look for when choosing your forex broker

There are a lot of things that should influence which broker you choose. This is a list of the top 10 things to think about before you sign up and some advice on how to choose the best platform for you.

1. Fees

Each forex broker has its own fee structure and so the costs of trading can vary. Some brokers make money on the spread – the difference between the buy and sell price of a currency pair – while others charge a commission on every trade. There may also be some other costs to consider, like inactivity fees or overnight fees.

Ideally, you want to find a broker that has low spreads, or a broker that charges low (or no) commission. In reality, you might have to make a trade off between the two. Some brokers offer a premium or professional account which unlocks cheaper trading if you deposit more money, often in excess of £1,000, or trade a significant amount every month.

Overnight fees are charges levied by CFD brokers for keeping your trades open for a few days at a time. They are usually charged as a percentage of your trade size. Inactivity fees come into effect if you don’t use your account for a certain period of time, normally around 12 months.

2. Regulation

Choose a broker that is regulated and that you can trust to keep your money safe. Every broker must be regulated with a financial authority; in the UK this is the Financial Conduct Authority (FCA). You can check if a broker is regulated by looking up its license number, which is normally in the website footer, and cross-referencing it on the FCA website.

3. Supported currency pairs

Decide which currency pairs you might want to trade and then check that the broker offers those forex rates. Most platforms offer all the major pairs, EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, NZD/USD, and USD/CAD. Many offer the minors as well. If you want to trade exotics then take more care as some brokers only offer a few or none at all.

4. Execution speed

Slippage is the bane of a trader’s life. It occurs when the price at which you place a trade changes before the order gets to the exchange and executes. It can mean you get a worse price than you expected and is particularly damaging for day traders where the profit margin on each trade is small.

Look for a broker that can execute trades as close to instantaneously as possible, or locks in the price you see on your screen when you place a trade.

5. Risk management

The best brokers have a duty of care to the traders that use their platform. Look for Negative Balance Protection, a fallback that prevents your account from going negative. This form of protection can’t prevent you from losing money on specific trades, but it does stop you from losing more than you deposited into the account. 

In a similar vein, make sure it’s easy to place stop-loss orders and that these are executed instantly. Stop-losses allow you to mitigate the risk from each trade by effectively setting a maximum loss you’re willing to accept. Some brokers also offer automatic guidance to show you where you’re going wrong if you keep losing money.

6. Software integrations

Forex traders tend to trade through a piece of software like MetaTrader 4 or MetaTrader 5. The software gives you lots of freedom over how your trading interface is set up and can integrate with a broker to route orders through their platform automatically.

This is a particularly good option if you plan on trading a lot. If that’s you, then choose an MT4 or MT5 forex broker to ensure it can seamlessly integrate with the software.

7. Leverage

Leverage is a crucial part of forex trading. As the price fluctuations in currencies are so small (the smallest unit of difference in price, known as a pip, is 0.0001) you have to use leverage to place large enough trades to make money.

While you can find brokers that offer high leverage, the maximum amount of leverage available is different across brokers. It can vary from 1:10 up to 1:30 or more. Professional accounts have access to more leverage than retail accounts. Beginners should be careful about using leverage because you can lose money very quickly with it, but it is necessary for regular fx trading. 

8. Economic calendar

Key economic events, like inflation reports and monthly jobs data, are a key driver of currency prices. A broker that gives you access to an economic calendar can be a huge help, as you can look up what economists forecast the data to be and predict how you expect it to move the price.

The best economic calendars include events from all over the world. With any currency pair you need to consider from both sides, so if you trade the USD/GBP pair, then look for data dumps that reveal the state of the economy on both sides of the Atlantic.

9. Reviews

Use customer reviews to assess how trustworthy a platform is. The App/Play store is a good source of material to find out what its customers think of a particular broker. Social media and message boards like Reddit are another way to judge the popular view of a platform.

Doing some extra research is the best way to avoid FX broker scams. A small number of malicious actors can imitate a broker to trick you out of your money. If you spend some time looking up genuine customer reviews you can steer clear of those platforms and stick to the safe and regulated options.

10. Industry awards

The forex and trading industries both give out awards to the best performing platforms. Along with all your other research, looking into which brokers won which awards can be a great way to narrow down your options and choose a quality performer.

For instance, if you plan on doing a lot of trading on mobile then look for the best performing forex app according to the industry award experts. There are also awards for things like the best execution speeds, best affiliate program, and many others.

What is a forex broker?

A trading platform where you buy and sell currencies. A broker is the intermediary between you and the foreign exchange market. The market sets a price for each currency pair and the broker is the middleman that executes your buy and sell orders, for a fee.

What types of forex broker are there?

The main type that any retail trader deals with is known as a ‘market maker’, or ‘dealing desk’ broker. This type of broker sets fixed prices and spreads for each currency pair and is the best option for any beginner.

There are three other types of broker; No Dealing Desk (NDD) brokers, Electronic Communication Network (ECN) brokers, and Straight Through Processing (STP) brokers. All of these give you access to the interbank rate (the prices banks charge each other for currencies) or better prices in some way, but they are also more challenging to use, require higher deposits and trading volumes, and offer a lot less protection from volatile prices.

Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.
Prash Raval
Financial Writer
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or teaching his son how to kick a… read more.