Choosing A Good Broker

The Trading industry is littered with snakes, holes and misconceptions! Whether it's someone to learn from, what to trade, where to trade and how to trade.

One area where people end up hurt is by picking the wrong Trading broker. As in, the place where you deposit your hard-earned cash in order to trade the markets.

I personally use FXCM and here I will explain why. Yes, they do pay a simple monthly advertising fee to be featured here on my site, but before you start thinking I'm a 'sell-out shill' and click off, let's explore WHY I have used them for over 10 years now...

Experience

FXCM has been doing its thing successfully for over 20 years and is still here. They're not some thinly capitalised start up that has a high probability of going bust and taking your money with you. In fact, the worst-case scenario for FXCM has already come and gone. Back in Feb 2015, I made a tidy 30% ROI in a single day when the Swiss Franc unpegged from the Euro. It was a crazy 2000+ pip move and bankrupted loads of brokers. FXCM was also teetering on the edge, but the company showed that it had the skill to secure a €300m investment within weeks. Net result? Us retail Traders didn't notice a thing. Me and my 200+ Traders kept on Trading as though nothing happened...

CHARTING SOFTWARE

To be honest, this is the SINGLE reason why I use FXCM. They may not have the best spreads out there, but it's irrelevant because their 'Marketscope' charting software is still, after all these years, the best charting software out there. And it's FREE. The world of trading tends to use MT4 which is NOT user intuitive at all, but because everyone uses MT4 doesn't mean it's good. Marketscope is hands down the best. Even Trading View has emulated a lot of FXCM's charting style.

SPREADS

As mentioned, it's probably not the best for spreads, but it doesn't matter. I'm not a scalper messing around on the 1 or 5 minute charts placing endless trades per day. If you're sensible and trade the higher time frames, no doubt your winning trades will be 50+ pips, therefore having an average of a 2 pip spread is fine. Of course it depends on what market you’re trading. From my observation, I’ve found that Majors have better spreads than Minors, and Minors have better spreads than exotics. Which makes sense as there’s bound to be a higher spread in markets with less trading volume going through it.

GOOD VS BAD BROKERS

One of the most important things to note is the type of execution service your Trading platform offers. FXCM has done rather well here in my opinion as it has what it calls Enhanced Execution. As a result, look at the pretty cool stats it recorded from 2020 which was a pretty turbulent year on the markets (as per FXCM’s July 2021 Slippage report):

63.44% of all orders had NO SLIPPAGE.
23.86% of all orders received positive slippage.
12.70% of all orders received negative slippage.
66.91% of all limit and limit entry orders received positive slippage.
54.13% of all stop and stop entry orders received negative slippage.
Over 87% of all orders received zero or positive slippage!

Not only that, the speed at which your trade is executed is blistering at only 18 milliseconds! That's much more important than obsessing over the spread.

CLIENT FUND SECURITY

In a crazy world, there's the ever-present risk of a big company going bust and you losing your money. FXCM is headquartered in the UK and fully regulated by the FCA, unlike some of these overseas brokers and they also do Client Fund Segregation. So your funds are completely segregated and held in a Bank, not their own pool of funds to play with. This means that in the unlikely event of FXCM becoming insolvent, your funds can't be used for reimbursement to FXCM's creditors. Also, you are protected by the Financial Services Compensation Scheme up to £85,000.

So there you go, I could go on and on about a lot of the finer details and points with FXCM, but at the end of the day, I've used FXCM for 10+ years now and love it.


I've had tiny accounts and I’ve had accounts around £2.5m ish (when I was running a small fund). It's just great. But I have to say again, it really is worth opening up a Demo Account for yourself so you can trade the live markets with virtual money and check it out for yourself!


But as always with anything trading related, it’s always worth remembering that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. 


This is why education and The Realistic Trader learning journey is so crucial…