Posted by forex at 6:18 AM
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1. Look at broker ratings on forums. There are dozens of trading and investing forums available online today, and most of them have a section for rating brokers. Here you will get firsthand reports from regular investors just like you about their experiences with the various financial trading companies. Some of the websites to consider using include EliteTrader, ForexPeaceArmy, ForexFactory and Trade2Win.
2. Make sure that the brokers are registered members of the different financial regulatory authorities in their respective countries. For example FINRA (financial regulatory authority) and the SIPC (stock investment protection corporation) are the regulatory authorities for stocks and options in the United States. While the CFTC (commodity futures tradition commission) and the NFA (national futures association) are the regulatory authorities for futures and forex. Brokers are not required to be members of these associations but it looks somewhat suspicious if they are not. All of the bigger firms are members.
3. Look at third-party awards. Financial magazines such as 'Barron's' and 'Stock and Commodities' magazine often give out awards for the best brokers based off of reader feedback. Although this should not be your only criterion, it is a valid consideration. Often these magaziens will have awards for various categories such as execution speed, trading platform, customer service and overall performance.
4. Get recommendations from friends. Again, one person's opinion shouldn't be your basis for choosing a broker, but, when factored in with these other criteria, a friend's opinion can have added value, especially if they have been using their broker for years.
5. Look at the number of years the broker has been in business. In this day in age of electronic communications a broker's reputation gets around quickly, and bad brokers tend to go out of business quickly. You should choose a broker who has been in business for a minimum of five years, but more is generally better.