Who is the best forex broker ? How to avoid Scam Forex Broker ?
All traders have this question in mind “how to choose a best forex broker that is suitable for me?” A Good Forex broker should be registered and regulated with government financial authorities. The best forex brokers should be registered and regulated by the government of developed countries such as UK, USA, Australia, Newzealand, etc,. There are several forex licenses such as FSA, FCA, CySEC, IFSC, etc,. Top forex brokers South Africa are FXTM, AVA trade. Top forex brokers USA are Forex.com, FXCM, Saxo Bank.
What is the role of forex broker in forex market ?
Forex broker is an intermediator between Liquidity Provider and Retail Trader.
There are 2 type of deals happening inside the forex broker with the Liquidity provider/banks.
1) Dealing desk
2) Non – Dealing Desk
Dealing Desk means Retail traders positions are blocked inside the broker. If retail trader lose money, broker makes profit (example : if retail trader loss 100$ in dealing desk account types, broker will get 100$ profit). If retail trader earn 100$, broker will loss 100$ from their own pocket. Dealing desk is same like CASINO/Gambling.
Non-Dealing Desk means Retail traders positions are passed to the Liquidity providers/banks. In this non-dealing desk account types forex broker makes money only by commissions for each trade placed by the retail trader. This is the reason you can see the big forex brokers have high commissions, spread. Because, they really make money only from the commissions.
The Genuine broker must have ECN, STP Account types. Check the broker has ECN (Electronic Communication Network) or STP(Straight Through Processing) account.
ECN = Non Dealing Desk account Only (your ECN account always connected to bank only)
STP = STP account have option to shift your account between Dealing and Non-dealing desk.
Other account types which offering bonus are mostly the Dealing Desk accounts
How to choose the best forex broker to avoid problems or withdrawal issues?
1) Check the forex broker have proper license for running the Brokerage company.
2) Check the Broker is Regulated by any Country Government Financial Department.
3) Check the broker has ECN (Electronic Communication Network) or STP(Straight Through Processing) account.
ECN = Non Dealing Desk account Only (your ECN account always connected to bank only)
STP = STP account have option to shift your account between Dealing and Non-dealing desk.
Other account types which offering bonus are mostly the Dealing Desk accounts.
4) Non-Dealing desk accounts have high commissions and Spread. Because, broker makes money only through spread and commissions. But, the Dealing desk accounts have low spread and no commissions. Because broker make money from clients losses.
5) Non dealing desk accounts allow you to trade with maximum 1 :100 leverage only. Because, Liqudity provider or Banks don’t support the broker with Higher leverage.
6) If you are going to invest more than 10,000 USD. Then please choose ECN or STP account types. The reason is if you made 10,000 to 50,000 in dealing desk, the broker need to pay 40,000 from their ownbroker’s money. It is better to choose ECN or STP account type with the broker for safe trading.
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