For new traders ( and even experienced ones) the decision on the type of currency broker to use is a difficult one. In recent months the forums have been full of horror stories of brokers trading against their clients, of winning trades being closed out at a loss, and of unethical practice across the platform. In addition the problem of trying to identify a broker who is sufficiently capitalized is equally important, and I believe that several in the next few months will go bankrupt. The reason ofcourse all this is happenning is because the market is largely unregulated, and where there are quick profits to be made then there will always be the opportunistic and illegal scams that are currently popular.
Many traders in the spot forex market do not seem to understand, that when they open a trade, much of the time they are in fact trading against the broker themselves. If a stop is placed on the trade then this is clearly visible to the broker and if it is his interest to take your trade out, then he will. Clearly those brokers with a dealing desk will have their own interest at heart first, not yours. In my view, any broker with a dealing desk has the potential to trade against you – I’m not saying they all do, but most will from time to time. Identifying a true ECN broker is not easy, but there are one or two that I know for sure, do not have dealing desks and all their trades are passed straight through to the market for the best execution and prices – if you would like the details please just drop me a line.

The other issue is ofcourse whether the broker has sufficient capital to support the business. In the USA the authorities are shortly to increase the minimum required to 5m USD – originally this was going to be 20m USD. If the latter were introduced there would only be 5 brokers who would qualify under the new system – the rest would go to the wall. So if you are looking for a broker there are several issues you need to consider carefully if you are not to becomece a victim of both trading issues and preservation of trading capital. My new site dedicated to currency trading, has a section devoted to just this issue and the 16 questions you need to ask before you choose your broker – over the top? – I don’t think so – after all it’s your money and it’s hard enough trading in the fx market, without stacking the odds against you as well!!! – good luck with your trading, and if you do have a broker who you feel you would recommend please just drop me a line as I am awlays happy to add them to the site.