Compare Forex Brokers 2022 Methodology

Spreads, Commissions And Overall Forex Broker Fees

You could argue this is the most important score category given you don’t want to spend more than you need to when trading.

We look at the average or typical spreads that brokers publish on their websites as our starting point. We like brokers that publish this information as it is a sign of transparency, we think all brokers should publish this so we do score favourably for brokers that do this. In a perfect world, all brokers would use the same measurements to determine their average spreads.

Generally, brokers with tight ECN or STP pricing with commission costs (especially low commission costs) score more favourably than brokers with standard accounts since there are fewer costs.

Brokers that have average spreads below 0.09 should expect

Admittedly some traders prefer standard accounts and even fixed spread accounts since it suits their trading style better, So you can put a good argument that this one size fits all scoring system may not be completely fair but these scores should only be a starting point, not a decision point. There is also the added complexity that some brokers offer both ECN pricing and standard accounts.

Leverage

Until a few years ago, this leverage category was of higher relevance since you could separate the brokers by the different leverage each broker offers. In recent times many regulators have placed limits on the maximum leverage they can offer.

The regulators in Australia, UK, Europe and UAE limit the maximum leverage for forex pairs to 30:1. This is very high so you will find all brokers offer this maximum in these countries.

We give brokers larger scores for those with higher leverage, not because such leverage is necessarily better but because traders generally like higher leverage (even though many regulators don’t consider such leverage good for retail traders.)

To split brokers on leverage, we look at what average they offer professional traders or with their other entities such as in Canada, Singapore and Offshore. That said, most brokers should have a similar score when it comes to leverage.

Trading Platforms

We look at the different trading platforms the brokers offer. We have a large bias towards brokers that offer either MetaTrader 4 and/or 5. This isn’t to say the MetaTrader platforms are better than proprietary platforms, some proprietary platforms have risk management tools and charting you won’t find on MetaTrader. It’s just that MetaTrader is widely recognised as the most popular platform worldwide with good reason and you are not locked in should you ever switch brokers.

We also like brokers that give you a choice of trading platforms across different types of media such as PC, Mobile and Tablets with Windows, Android, iOS and Mac.

Lastly extra trading platforms the brokers offer such as Social Trading, Copy Trading and Automated trading features.

Risk Management

We have a broad definition of risk management. All brokers offer the same basic risk management tools such as a stop loss. We add points for brokers with specialist risk management tools such as guaranteed stop loss and negative balance protection (when it is not a requirement from the broker).

We also consider the brokers regulation…since our audience covers readers across the world such as Australia, the UK, Singapore and Canada, it is important to know you are protected by a relevant regulator. If the broker is not regulated in the UK, Europe or Australia (where most of our readers are located) then this will affect their score.

Brokers that don’t have any regulation or only use offshore regulators get deducted points.

Tier 1:

Australian Securities & Investment Commission (ASIC) – Australia

Securities Futures Commission (SFC) – Hong Kong

Japanese Financial Services Authority (JFSA) – Japan

Financial Conduct Authority (FCA) – United Kingdom

Commodity Futures Trading Commission (CFTC) – United States

Tier 2:

China Banking Regulatory Commission (CBRC) – China

Financial Markets Authority (FMA) – New Zealand

Financial Services Board in South Africa (FSB) – South Africa

Tier 3:

Mauritius’ Financial Services Commission (FSC) – Mauritius

Range Of Markets

While most of our readers will be interested in trading forex, gold and silver, a good defensive trading strategy is to have a diverse range of markets to trade from.

For this reason, brokers that offer a larger range of forex pairs and a range of instruments such as shares (CFD), Commodities, Bonds, Indices, Cryptocurrencies and ETFs (among others) score higher points.

Customer Support

Sadly, some brokers don’t feel the need to offer customer support such as live chat (they use chatbots), local call numbers and even competent support staff that understand trading. Traders deserve better so we mark up for brokers that offer good support.

We also look at other customer services such as free education, trading analysis and even a range of funding methods such as free deposit and withdrawal. These features all surely make for a better trading experience and lead to a better score.