Lessons How to Choose the Best Forex Broker? Published 1 year ago on September 16, 2017 By Fredrik Vold Choosing a new forex broker to trade with can be challenging for anyone. There is so much (mis)information available online, and it can be hard to navigate the landscape. There are also lots of stories about brokers using unethical practices and frankly scamming their clients. Therefore, it is very important that you do your own due diligence and be cautious about which broker you trust with your hard-earned money. Dealing Desk The dealing desk model is the dominant model among forex brokers today. When a broker has a dealing desk, it usually means that they take the other side of their clients’ trades. For the same reason, these brokers are also known as market makers. It is important to understand that trades you make with this type of broker may not even leave your brokerage firm. The way these brokers operate can definitely create some conflict of interest with their clients. The main reason for this is because the broker will profit every time you lose on a trade. Also, being a dealing desk broker offers the broker more flexibility, and thereby opens up opportunities for the broker to employ various unethical practices that will not benefit you as a trader. For this reason, I would not recommend going with a dealing desk broker unless you have your own specific reasons for doing so. No Dealing Desk When a forex broker is a no dealing desk broker, it means that they don’t take the other side of the trade. The obvious benefit here is that the broker has no incentive to make you a losing trader Instead, your orders are passed on to various third parties, which can usually be categorized as: Straight Through Processing (STP): An STP broker essentially pass your orders on to a liquidity provider, which are usually big banks. These brokers may inflate the spread offered to you in order to keep a profit after they have turned your order over to the third party. This type of broker is sometimes referred to as a “fake” ECN broker, because you are not offered the “real” spreads from the interbank FX market. Many retail brokers who advertise themselves as “no dealing desk” fall into this category. Electronic Communication Network (ECN): This type of broker has become much more popular over the past few years. If it is a true ECN broker, it means that you are given direct access to the interbank market, in which case you will be charged a commission in addition to the spread. The spread in this case can often be extremely tight, especially on the most liquid currency pairs. Note that some retail brokers may advertise themselves as ECN without really being a true ECN broker, for example by marking up the spreads compared to those that exist in the interbank market. Spread, leverage and minimum deposit These three aspects are what most traders compare when choosing a broker to trade with. The spread is, or course, very important for all traders, as it determines how much potential profit the trader will be left with. You need to consider your total transaction cost, which includes spread, any commissions, and slippage. Whether you should choose tighter spreads + commission, or wider spreads with zero commission, depends on your trading style and how much money you are trading with. Very large traders obviously prefer to pay a fixed commission, but smaller retail traders may benefit more from paying only the spread. Leverage is another aspect new traders often compare when choosing a forex broker. High leverage looks tempting, because it basically means that you will have more money to trade with in the market. However, it is a double-edged sword and something beginners should be very cautious with. The leverage offered usually depends on the regulation the broker is subject to. Some brokers with questionable regulation may offer up to 1:1000 leverage, whereas brokers based in the US will offer a maximum of 1:50. When it comes to minimum deposit, the requirements vary wildly. As a general rule of thumb though, it is better to go with a broker or an account type that requires the highest minimum deposit you can afford. This is because bigger accounts are often offered far better trading conditions than smaller ones in terms of commissions and spread. Regulation The regulatory environment your broker is operating in is a very important factor. This determines what the broker can or cannot do with your orders, and what kind of protection you are offered if the broker goes bankrupt. Remember that some countries don’t require brokers to be regulated at all. It is therefore best that you stick with brokers regulated in a jurisdiction you know and trust. Capitalization You will want to trade with a broker that is well-capitalized. Capitalization and reserve requirements depends mostly on the country where the broker is regulated. In addition, you should check if the broker has a policy to segregate client’s funds from the firm’s own funds. This is very important in order for your money to be safe if the broker is shut down. Again, well-known and trusted jurisdictions reduce the chances of the broker shutting down shop unexpectedly. Customer Service An often overlooked question is whether you can actually reach the broker and speak to a real person when you need it the most. Nothing is worse than experiencing for example a technical problem with the platform while you have an open position in the market. Make sure your broker offers reliable customer service and do some searching online about other trader’s experiences with the broker. There are tons of websites offering forex broker reviews online, but most of these are not a reliable source of information. These websites are basically affiliate marketing sites for the brokers, and therefore have no incentive to do an honest review. Instead, refer to websites like FX Intelligence that actually provides trustworthy information on this topic. Lastly, it is important to remember that most brokers want you to succeed because they want to continue to do business with you. As long as you are satisfied, the broker will also continue to make money from the relationship. You will also likely find that no broker is perfect, and there will always be pros and cons no matter who you choose. Featured image from Pixabay. Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (3 votes, average: 3.67 out of 5)You need to be a registered member to rate this. Loading... Fredrik Vold 4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity. Follow @HackedCom Feedback or Requests? Related Topics:BrokersForexFX Up Next Crypto-Hedging Part 1: Alternatives to Cashing Out on your Coins and Managing Risks Don't Miss Trading Commodities: Futures Market for Beginners You may like Forex Update: Risk Rally Continues as the Fed and the Dollar Remain in Focus Forex Update: Dollar Bounces Back as German Industrial Production Collapses Forex Update: Markets in Turmoil in the Aftermath of Flash Crash 5 Things To Watch Next Week+ChartBook Forex Update: Dollar Rallies Amid Epic Short Squeeze in Stocks and Oil Forex Update: Dollar Drifts Lower With All Eyes on the Fed 3 Comments 3 Comments kamilstanek September 16, 2017 at 9:14 am Hi, thank you for the post. Is there your recommendation which one do you use? Log in to Reply Fredrik Vold September 16, 2017 at 3:04 pm Hey, I use Saxo Bank for my own trading. Have been happy with them so far 🙂 Log in to Reply kamilstanek September 16, 2017 at 3:19 pm Thanks. Log in to Reply You must be logged in to post a comment Login Leave a Reply Cancel replyYou must be logged in to post a comment. Cryptocurrencies Crypto-Hedging Part 1: Alternatives to Cashing Out on your Coins and Managing Risks Published 1 year ago on December 20, 2017 By Mate Cser Hedging methods give you the opportunity to reduce your risks in times when you think that crypto prices will fall while keeping your coins, or at least staying within the segment, while also avoiding taxing in a certain period. That doesn’t mean that you won’t pay taxes on your profits, rather that you will be able to tweak the timing of the taxation, and maybe optimize the payable amount as well. Also, in a lot of cases, it is easier and cheaper to enter a hedging position than straight up selling your coins. Sure enough, these positions have their own negatives cost- or otherwise. Trading fees, spreads, counterparty risk, cash losses, and particular tax issues could make them less alluring, while given the less developed state of the segment, availability is also an issue. Traditional Vs Crypto-Hedging (more…) Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (2 votes, average: 5.00 out of 5)You need to be a registered member to rate this. Loading... Mate Cser 4.7 stars on average, based on 441 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market. Follow @HackedCom Feedback or Requests? Continue Reading Commodities Trading Commodities: Futures Market for Beginners Published 1 year ago on August 13, 2017 By Fredrik Vold With high valuations and increasing uncertainty in the world’s stock markets, it is no surprise that investors are looking for stable alternatives for investing their money. Fortunately, commodities are there to take over as global stocks are losing their appeal, and investors are seeking effective ways for managing risks. What Are Futures? Futures contracts are basically financial contracts that obligate the seller to sell an asset or the buyer to buy an asset. The type of asset concerned could be a financial instrument, a commodity, stock market indexes, and currencies, and has a predetermined future price and date of delivery. The futures contract itself contains details of the quantity and quality of the underlying asset and is standardized so it can be traded on the futures exchange. Some futures contracts call for payments to be made in cash, while others require physical delivery of the asset. The futures markets are particularly well known for their ability to use very high leverage, as compared to stock markets. For the purposes of this article, we are focusing on futures as an instrument for trading commodities like oil, gold, silver, sugar, or even coffee beans. Lots of commodities and agricultural products are traded in the futures markets, but keep in mind that some of them might not be very liquid. Marketplaces for Futures Trading There are many marketplaces around the world where futures are traded. A few of them include the New York Mercantile Exchange, the Minneapolis Grain Exchange, the Chicago Mercantile Exchange, and the Chicago Board of Options Exchange. The futures market is vast in size and typically increase in popularity during choppy times in the stock market. Benefits of Futures Trading VS. Forex Trading Some traders might be wondering which market they should choose; forex or futures. The truth is that they both offer some pros and cons. Some of the reasons for choosing futures over forex might be: Liquidity: The futures market is extremely liquid with huge volumes being traded every day. Of course, forex is also a liquid market, but the dynamics of the markets may often be different. Low cost: Futures is actually a very low-cost way of trading, and in some cases it can cost you less in fees than what is possible when trading forex. Reduced screentime: Some traders who have made the switch from forex to futures also say they have managed to reduce the amount of time they spend glued to their screens, while at the same time improving their profitability. Traders have also experienced that their trading strategies are working better in the futures market than in forex. There is some indication that certain instruments in the futures market are actually responding better to technicals than is usually the case in the forex market. In fact, some futures instruments such as the E-Mini Nasdaq and E-Mini Dow Jones even have a tendency to trend very nicely during certain hours of the day, providing shorter term trend following traders with great opportunities for making profits. Choosing a Broker When you are researching the best futures broker, there are some features you should keep a look out for before you ultimately make the decision. These features include: A transparent fee structure Quick execution of trades Trading platforms are intuitive and fully functional Ability to access several futures exchanges Some well-known online futures brokers you might want to take a closer look at include: TD Ameritrade E*TRADE Interactive Brokers Optimus Futures These brokers all have different fees and minimum deposit requirements, meaning you need to go through each of them to make an informed decision regarding which one best suites your particular situation. Educational Resources Another great benefit of trading futures is the sheer amount of educational resources available to anyone online. There are huge forums such as futures.io that are dedicated to discussing anything related to futures, which can be a big help on the way for a beginning trader. In fact, there are even podcasts like the the Futures Radio Show that talks about all kinds of interesting topics related to futures trading. As you have probably understood by now, futures trading can be a viable option for many retail traders and offers some real benefits over other markets. It may seem overwhelming at first to get started in futures, but for the traders who constantly strive to learn and improve themselves, chances are the efforts will pay off. Featured image from Wikimedia Commons/Lars Plougmann. Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (0 votes, average: 0.00 out of 5)You need to be a registered member to rate this. Loading... Fredrik Vold 4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity. Follow @HackedCom Feedback or Requests? Continue Reading 2% Club My Golden Rules for Financial Freedom: Why I’m going to Reach $1 000 000 Published 1 year ago on July 19, 2017 By Jonas Borchgrevink This is the most important overall lesson I can teach you. It involves multiple of my strategies, strategies that I’ve written about before. But I’m writing this article to give you an overview of what I’m doing. Since I started Hacked.com and the new strategy for reaching $1 000 000 and financial freedom (in my eyes, could be very different for you) I’ve made more money than I’ve ever made before. My cashflow is increasing monthly thanks to CCN.LA, Hacked.com and Wilhelmsen (my regular job), and my investments are doing very well, including my trading strategy – the 2% Club. I’ll make this article to the point. No bullshitting around. I sincerely hope that you will follow the same strategy as I am, it will make you financially independent in the long run. Qualities needed Patience Will Brainpower Golden Rule #1 Always be cashflow positive. You must have a job or a business where you receive positive cashflow on a monthly basis. Golden Rule #2 Have a side gig. If you are employed, try to establish a second revenue stream. This can be done by creating a business on the side or even having a second job (even though I would not recommend the latter). With a second revenue stream, you are certain that you will be cashflow positive even though you would lose your regular job or business. I’m currently employed in Wilhelmsen, but I have two separate revenue streams from Hacked.com and CCN.LA, including the one I’m receiving at Wilhelmsen. Also read: You will lose your job Golden Rule #3 Continuously increase your monthly income. This might be hard if you are employed in a company. But then you should have a side gig you can focus on off-hours. Always try to find new revenue streams. Golden Rule #4 Pay debt. If you have loans, try to pay them as fast as possible. I do not like to have loans. You could benefit from having loans if you get tax deduction – as we do in Norway, but still, I’m no big promotor of having debt. Golden Rule #5 Invest surplus money. If you have surplus money, money that you do not spend on the most essential things, invest a certain percentage on a monthly basis. I’m investing 33% of my monthly income and will do so for many years to come. That’s why I created the 33% Club. Golden Rule #6 Trade. All these golden rules should be followed in the same chronological order. If you fail at one golden rule, you should not continue to the next one. There’s a reason for having “trading” as the last golden rule. You should not trade with money unless you are able to complete the first five golden rules. Trading is risky, you can lose more money than you put in, and that fast. However, if you have reached the sixth golden rule, then you could join me in the 2% Club (or create your own trading strategy). And finally, remember: Never lose money. Please comment below if you have inputs. Featured image from Shutterstock. Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink. Rate this post: Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way. (8 votes, average: 4.63 out of 5)You need to be a registered member to rate this. Loading... Jonas Borchgrevink 4.2 stars on average, based on 56 rated postsFounder of Hacked.com and CryptoCoinsNews Follow @HackedCom Feedback or Requests? Continue Reading Top 3 Price Prediction Bitcoin, Ripple, Ethereum:... Ethereum Price Analysis: ETH/USD at Risk of Fast M... GBP Price Prediction: British Pound Jumps on Growi... ETH/USD Price Analysis: Ethereum’s “Thirdening” Ap... 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