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www.forextester.com1.4361HOW TOCHOOSE ABROKER?10 key stepsIt is with the help of a broker that you get access to thefinancial markets, so you need to choose a broker as carefullyas your business partner. The broker must be reliable and competent,but at the same time should be profitable for you personally.www.forextester.com

CONTENT3Registration and Financial Regulation6Guarantees and Insurance8Trading Assets and Accessible Markets9Trading Conditions12Software14Technical Conditions15Deposit Replenishment and Withdrawal17Broker Agreement19Privacy and Data Protection Policy20Training Opportunity21Conclusionwww.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM2

Step 1REGISTRATIONAND FINANCIALREGULATIONEven if the broker is popular and actively advertises, you mustcheck the main condition that its activity in the financialmarket is legal. After all, you intend to entrust him with yourmoney! Therefore, be sure to check the following informationbefore choosing a broker (in order of importance for making adecision):REGISTRATION DATARegistration data: country of jurisdiction, active status, availabilityof licenses and certificates, all phone numbers, addresses,website, e-mail and other accounts actually exist and are correct,as well as the location of the central office and the office closest toyou.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM3

Remember: companies registered in offshorezones with opaque regulations inspire muchless confidence.REGULATORY INFORMATIONThe broker must be licensed by one (or several) internationalfinancial regulators (CFTC; NFA; FSA; FCA; FINMA; CySec; FDF;BaFin; ASIC; CIPF, etc.).The number and text of the corresponding license must bepresent on all of the broker’s official resources.Make sure that the chosen company is regulated by the relevantregional organizations. E.g., besides the usual regulator, brokersin the EU must act in accordance with the ESMA guidelines. Youshould never consider brokerage companies without suchregulations.INFORMATION ABOUT THE COMPANYThe history of the company, the size of its authorized funds, anytypes of guarantees (banking guarantee, property guarantee,etc.), are there any open lawsuits, and, if possible, the names of thefounders and large investors.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM4

It is advisable to study official reports of the broker as a legalentity serious companies always provide such data in the publicdomain.MONTHLY INCOMEMonthly income advertised and real.It is recommended that you carry out the calculations yourself oruse the estimates of analysts and/or customers of the company.Reminder: profitability of more than 50% permonth is almost impossible, such advertisingshould not be trusted.REVIEWSReviews about the company, its customers’ opinions, evaluationsof analysts, information on various forums and specialized blogs,in the news feed and ratings.Only after that, should you move on.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM5

Step 2GUARANTEESAND INSURANCENobody will give you absolute protection from a broker goingbankrupt. Even large companies can be ruined by the market. Forexample, some brokers did not survive the market crash test onUSD/CHF on 1/15/2015. But you should take the most effectivemeasures to protect your money.You need to select a broker who offers a program withadditional guarantees segregated bank accounts or otherschemes for financial loss insurance.For example, the companies regulated by the FCA have formedthe FSCS compensation fund which acts as a guarantor ofcustomer funds of up to 50,000 in the event of bankruptcy of thebroker. Brokers who have diversified bank accounts or which considered more reliable.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM6

Be sure to analyze all information about the broker that can befound possible investment schemes, transparency of the workof the companyand quality of the company’s financialmanagement.It is logical to start working with a company that has beenworking in the market for many years, and not to invest in a novicebrokerage company, no matter what conditions it offers. In anycase, a major broker with a positive reputation should be apriority.Now let’s select the necessary weapons.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM7

Step 3TRADING ASSETSAND ACCESSIBLEMARKETSLet’s use common logic: the wider the assortment, the moreprofitable the purchase that can be made. A trader should beable to invest in different markets, from CFDs on indices orcommodities, stocks or ETFs to exotic cryptocurrencies andfutures. In the initial stage, you should give preference tobrokers (and exchanges) with the maximum number ofavailable trading assets.If you have already formed personal trading preferences or if youthink that your strategy is more profitable on a certain type ofasset, you should compare several brokers and choose thosewho offer more favorable trading and technical conditions forthose assets.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM8

Step 4TRADINGCONDITIONSLet’s select the most important parameters for trading: narrowspreads, profitable swaps and commissions, leverage and depositoptions, minimum lot size, availability of demo accounts. All thiswill help to reduce losses and protect your profits.Spreads can be static (in points) or dynamic (higher or lower,depending on the dynamics of the market): test and choose theoption that is most beneficial for your trading strategy. You preads/swaps/commissions specifically for the trading assetsselected by you.Don’t forgetto pay attention to the minimum levelof Take Profit/Stop Loss you can set.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM9

The minimum deposit and leverage should be consistent with thelevel of capital and the management system. A serious brokershould offer several types of trading accounts with differentconditions.Be sure to analyze the relevance and reliability of trade reports,the availability of online statistics for a primary investor, the resultsof independent monitoring.As a rule, the exchange commission isalready included in the charges but note:some brokers may have hidden payments!Forexample,mostbrokersusesomemandatory commissions (“subscription fee”)or a penalty for inactivity (in the absence oftransactions for a certain period).If you plan to keep a small amount in your account and not totrade very actively, it is better to choose a broker’s plan with acommission based on the transaction volume. Otherwise, youcan lose a significant part of your funds because of such“guarantee” payments.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM10

Today, you can enter the market with capital of 1, a minimum lotof 0.01 and leverage of up to 1:2000. This is convenient forbeginners, but exchange brokers that require sufficiently largedeposits (from 2,000 to 5,000) work more reliably and offer morefavorable conditions. With an increase in investments andrelevant experience, be prepared to replace a broker suited “fora beginner” by a more serious company. And perhaps more thanonce.You will need to spend some time checking the tradingconditions with transactions on a demo account, or even better,on a real cent deposit account, because the transition from ademo account to a real one can cause additional losses.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM11

Step 5SOFTWAREA trading platform, in addition to the transaction supportmodule, should have a user-friendly interface with technical andfundamental analysis tools. The broker is also expected to offer amobile version of the software and applications for differentoperating systems, all without loss of functionality.The popular MetaTrader 4(5) (or proprietary software made on itsbase) looks more convenient, but we recommend that you payattention to companies working with "clean" exchange software ThinkOrSwim, ATAC, MarketDelta, Quik, NinjaTrader. Theseexchange terminals receive information about real tradingvolumes (Depth of Market) it is impossible to survive withoutthis in the contemporary market.We recommend that you testseveral on and regular updates.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM12

As an argument in favor of a particular broker, you can considerthe presence of additional trading options, the possibility ofscalping and automated trading, creating and testing tradingstrategies.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM13

Step 6TECHNICALCONDITIONSSpeed and accuracy of order execution at the declaredprice. Every lost fraction of a second is money that youpotentially lose or earn. You need to search for a broker withminimal reaction time in different trading conditions,analyze the statistics of requotes and other technicalproblems.Quality of quotes: in addition to separate transactions onthe real and demo accounts, you need to conduct extensivetests on the price history to identify possible “gaps” orincorrect data in the price feed. The larger the broker, thegreater the depth of liquidity it guarantees.The quality of online communication with the broker, theavailability of additional servers.Professionalism and responsiveness of the support teamthrough various communication channels.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM14

Step 7DEPOSITREPLENISHMENTANDWITHDRAWALPayment methods, terms, tariffs and commissions, verification,guarantees and restrictions, taxation and general financial policyof the broker are the most important features.Brokers can offer various schemes for placing and withdrawingmoney, including own payment systems and cards, exotic andcryptocurrency assets.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM15

As a rule, the broker and the client pay taxes separately, so checkthe jurisdiction and the scheme of fiscal payments beforestarting to trade.If the broker you like has passed all the previous tests, proceed tothe study of the main document.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM16

Step 8BROKERAGREEMENTNow the document can be executed and signed online it is fast,convenient and dangerous. The trader fills out an interactiveform on the broker's website, puts the desired mark instead of asignature, and, most often, does not read the text that they have“signed” at all. Especially what is written in small print. This is onlyrecalled when a conflict arises.Take the issue seriously and study the agreement and all itsattachments in detail. If necessary, consult with a lawyer.Pay particular attention to the following formulations:what is considered force majeure and what are the tactics ofthe broker in such situations.the concept of a “non-market” quote (or period) and itsconsequences in the presence of open transactions.terms and guarantee for withdrawing funds and closing atrading account.www.forextester.comHOW TO CHOOSE A TRADING BROKERWWW.FOREXTESTER.COM17

You should also check the conditions under changed.the result of your transactions may be cancelled or revised.your trading account may be blocked.you have the right to make a complaint.Be sure to study the mechanism and jurisdiction of handlingclaims and disputes. All serious doubts about the correctnessand your personal benefits should be interpreted as argumentsagainst this broker.www.forextester.comHOW TO CHOOSE A BOKERWWW.FOREXTESTER.COM18