Forex Trading Brokers

When choosing forex trading brokers, your primary concerns include best possible trade execution, reliable back office functions, and competitive prices.

You need best possible trade execution to keep slippage as small as possible, which plays a role in profitability of any trading system.

For short-to-medium range trading strategies, slippage (the price you were quoted vs. the price you actually get from the market) can change the profitability of such system profoundly.

Because of the popularity of stock market trading, stock brokerages execution capabilities are measured weekly by such companies as Keynote (the Keynote Broker Web Transaction Performance Index shows the average response times and success rates for creating a standard stock-order transaction on selected brokerage Web sites).

Unfortunately, there are no similar services for forex brokerages.

What I've found useful, is to go to forex discussion forums and discussion groups (such as those at groups.google.com) and reading the user reviews of forex brokers. For some brokerages, you'll find that the trade execution capabilities are not up to what you'd want.

Forex Trading Brokers - Reliable Back Office

A back office is one of those things that you notice when it is not functioning properly. And a poor back office is a tell-tale sign that the brokers other functions may lack in reliability as well.

If you look at the bigger investment banks'/trading rooms' back office functions, you may find that everything revolves around reliable back office, and not the other way around.

Part of the reason why back office is so important to those companies that are in the forex brokering business for the long term are the possibilities for legal liability if back office can't resolve issues in time and reliably.

Forex Trading Brokers - Competitive Prices

Finally, when choosing a brokerage that you're going to open an account with, compare trading spreads and other fees.

One good way to do this is to open a demo trading account with some of the final names on your short-list.

If you find the spreads competitive for one or two of the most popular trading currency pairs, but ridiculously wide for the less popular currency pairs, it may be best to look for another broker to trade with.


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