Finding a Forex Broker

A few days ago I received the following question: “I need help finding a forex broker. I notice that spreads among many of them are pretty much the same. So how do I choose?”

The spread is definitely not the most important factor in choosing a broker when you are choosing among those offering the same spread. Most important in choosing a brokerage firm is the per trade slippage, the difference between the entry order price and execution price.

Based on a study I saw some years back, ten orders were placed with five forex brokers. All orders were placed in the same market at the same price, at the same time of day. The difference in slippage from worst to best was over $800. Slippage one year for one particular firm, trading one and two contracts of EUR/USD, was over $20,000 per account. All the fills were supposedly legitimate. One order for 15 contracts was to sell at a specified price. The market took over two minutes to fall in one-pip increments from “.30” to even money, at “00,” before an up tick occurred. All 15 contracts were unbelievably filled at 00. Slippage on the order was a staggering $3,000. A week later another order was slipped over $2,000. At that point, all accounts held by the trader were closed because he complained. USD/JPY once had the daily high and low in a rather tight range. One trader was filled on his buy stop and sell stop at the high and low of the day, 360 pips times ten. You might call it, legalized theft. The broker probably took both sides of the orders. Forex markets are notorious for their slippage, as is seen in any of the exotic currencies.

Any broker who allows this kind of slippage to occur on his customer’s orders is not worth having as a broker.

 

1) I really hope you're not lumping "bucket shops" in with brokers.
2) Try to avoid stop orders in "thin" markets.
3) Avoid exotic currencies too. There's nothing "cool" about trading them.

 

I agree, you should focus on just a couple of currencies and not overdue it

 

I am trying to find ones that give a good bonus

 

if they have a bonus they are probably crap. they'll just take it back with slippage, stop hunting, etc.

 

traderswild: As you probably know I cannot make a direct recommendation for my own website or advertise for any other website. It's against the rules of the forum. However, if you will make the effort to contact me directly, I can give you information on where to legitimately get a bonus of $4.11 every time you trade a currency pair. And you will be able to choose among 15 brokers, only 2 or 3 or which are worthwhile.