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REVEALED: Top 10 Secrets Of Selecting A
Forex Broker
Forex trading could be the most profitable business in the world today. However, the risk involved in trading this market – at least,
what people say about how risky it is – keeps many investors away
In this report, you’ll learn the good, the bad, and the ugly truth about Forex brokers from real Forex insiders. We’ve been in this business for
more than 10 years; not just as traders, but also as trading system designers and trading software developers
BY THE FOREX MEGADROID TEAM
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 1
TABLE OF CONTENTS
Trading Is A Business ................................................................................................................................... 2
There are two kinds of traders: ................................................................................................................. 2
How to find the best trading system? ........................................................................................................ 5
5 Things You Must Ask A Forex Broker Before Opening A Live Account .................................................... 7
1. Are you an ECN/STP or Market Making Broker? .............................................................................. 8
2. Which trading platforms do you provide? ........................................................................................ 10
3. Where are you located and are you regulated? .............................................................................. 12
4. What kinds of accounts do you offer? Can I open a Free Demo account? ................................... 14
5. What’s the minimum deposit required, and what withdrawal / deposit options are there? ............. 15
6. Do you accept US residents? (Yes! – We know we said “5 questions”, but…) .............................. 16
Forex Brokers, Back To The Future ............................................................................................................ 20
Beyond ECN & Market Makers ................................................................................................................... 29
How To Choose The Best Broker ............................................................................................................... 33
How To Avoid Scam / Bad Brokers ............................................................................................................. 40
5 Signs Of A “Cheating” Broker .................................................................................................................. 44
Sign 1: “Technical issues” with their platform ......................................................................................... 45
Sign 2: Fake or unrealistic bonuses and/or unclear fees and hidden charges ....................................... 45
Sign 3: Slow / Unhelpful support ............................................................................................................. 46
Sign 4: Hiding the company’s details ...................................................................................................... 46
Sign 5: Lying about or hiding their business model ................................................................................ 46
How To Force Your Broker To Help You Make Money .............................................................................. 48
Final Words… ............................................................................................................................................. 51
DISCLAIMER .............................................................................................................................................. 53
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 2
TRADING IS A BUSINESS
When you look at it as a get rich quick scheme, or as a push button solution to financial
problems then it’s absolutely as risky as gambling because, in these situations, it becomes
gambling.
If, however, you think of it as a real business, then you’ll find it no more risky than any other
business in the world.
What steps would you take before you start any business? Let’s say that the most important
steps begin with market research, preparing a business plan, providing for business tools and
costs, testing the market ...etc.
Starting in Forex is no different. If you think of any new market order you open as a new
business deal, you’ll find that by planning and calculating your profits and risks properly, you
can easily achieve your short-term and long-term goals… exactly as planned.
However, if you just deposit some cash into your trading account, load some indicators and
then start trading the same way that you’d play a video game, then we’re sorry to tell you that
Forex is going to be a very risky encounter - we can even predict that, regardless of how much
profit you think you’re making, you’ll eventually lose.
So, depending on how you approach things, Forex trading can be no more risky than a
traditional business or it can be as risky as outright gambling – it’s totally up to you.
Does our “vision” of your trading future make us “Team Nostradamus”? Maybe; maybe not.
This one’s complicated, but we’ll do our best to make it as simple as possible.
THERE ARE TWO KINDS OF TRADERS:
1 – Those who prefer to follow the market, and
2 – Those who prefer to predict the market.
Luckily, there are many successful systems and strategies for both trading styles.
The question is this, which kind of trader are you?
Why is that important to understand? Because, if you’re using the wrong system, it’s like trying
to write with the wrong hand - you simply won’t be as successful as you could be.
However, despite what you think you know about yourself, you won’t really know which style is
best for you until you’ve tried both.
If you’re just starting, then we suggest that you begin with following the market until you
become more experienced.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 3
When you become more accomplished as a trader, you’ll be able to use either approach
according to market conditions …and this is an important secret to success!
One System For All Market Conditions… Urban Myth #217
Unless the system is using more than one strategy, you should always use different trading
systems for different market conditions.
The most common mistake that we see beginners making is that they try to use the one system
or strategy they feel really comfortable with in all market conditions.
Why this is a mistake? Simply because the market goes through multiple “changes” throughout
the day, and coping with those changes requires different kinds of strategies.
For example, if you’re trading EUR/USD, you’ll find this pair relatively slow and predictable
during the Asian session so, at this time of the trading day, it would be best if you used a
scalping strategy.
After the London session opens, however, you’ll find the same pair become almost hyper-active
- trading volume is clearly higher, and trends are more powerful. During this part of the trading
day (and the US session to a lesser extent), you can expect far better results if you’re using a
trend-following strategy.
During important news releases (most of which occur during the London and US sessions),
moves can be explosive so you can easily use a breakout strategy if you wish to trade during
those times, though we’d recommend that beginners avoid news trading until they’ve become
familiar with how the market can behave when things are going crazy.
If you try using a trend following system/strategy during times that are “too quiet”, you run the
risk of many false signals - or no signals at all. By the same token, if you decide to use a scalping
system/strategy during the “hyper-active” sessions then … good luck! - Trust me, you’ll need it!
So, to ensure that you get the best results possible from your trading system (or any trading
strategy – automated or manual), you must be certain that works under the specific market
conditions in which you intend to trade it… either that, or pick a multi-strategy system able to
cope with the different market situations that will arise.
To cut a long story short, the perfect trading system is the one that you get better results from!
However, there are general guidelines that may help you on your journey and – if you follow
them – you’ll have a chance to take some short-cuts towards achieving your goals.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 4
1. The perfect system should follow basic money management rules.
For example, the perfect system should not rely on a risk/reward ratio less than 1:1 so, if the
stop loss is 50 pips, then your first target should be 50 pips or more.
2. The perfect system should be designed for specific market conditions.
If you see a “system for all market conditions” sign, run! There’s no such thing.
** Do not confuse single strategies being touted as “Holy grail”, “Trade any pair & any
timeframe” systems with multi-strategy systems that can function in any conditions.
The main system types are designed for:
Trend following – Trading Breakouts – Trading Reversals - Scalping.
There are many other variants, of course, but those are the main methods used with most
common systems.
3. The perfect system should allow you to understand how it works!
“Black Box” systems may work but, at the end of the day, they’ll add no value to your
experience and knowledge as a trader, though simply following suggestions/signals generated
by any reasonable trading software could generate some short-term profits for you.
If that’s what you’re after, then go for it. However, if you’re looking for long-term investments,
then you should always focus on investing in yourself.
4. The perfect system should focus on a specific market.
A system that works with all pairs and produces the same stable results is impossible to find.
Each pair and each market has different characteristics that need special measurements,
settings, and tools.
A system that generates a 70% win rate on USD pairs is very unlikely to achieve even a 40% win
rate if used on JPY pairs.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 5
HOW TO FIND THE BEST TRADING SYSTEM?
When you’re looking for a trading system, the first thing is to try and understand the core
strategy behind it.
Sometimes, system creators cause your mind to get bogged down with details, and that can
make you forget the basic things that you should be looking at. For example, you could be
introduced to a trading system and amazed by the advertised results and benefits and all of the
other “marketing” material that comes with the “package.” After you get it, however, you
discover that the core strategy isn’t one you feel comfortable with.
Here are some questions that we suggest you ask any system vendor before purchasing a
system:
• Is it based on an intraday trading strategy, a scalping strategy or a breakout strategy?
• Does it require specific software to work, or it can be used with any trading platform?
• Are the strategy rules divulged, or is it a “black box” system?
• Is it good for beginners and/or advanced traders?
• Which time frame(s) and pair(s) does it trade?
• What’s the risk/reward ratio?
• What’s the average winning rate under normal market conditions?
• What’s the best time of the day to trade this system?
• Is it tested on live and/or demo accounts?
o If the answer is yes, then:
� For how long?
� Is public access provided?
� Has the information been independently verified?
• Is it provided with documentation and full, detailed instructions?
o If so, are any videos included?
Again, the perfect trading system is the one that you get better results from. You may have
read tons of positive reviews about a trading system, but they’re all worthless if your results are
negative!
If in doubt, ask the system provider what you may be doing wrong – in many cases, small errors
can account for huge losses – but, if you’re 100% sure that you’re doing everything right, then
simply ignore all those reviews and opinions and trust your own “live test”.
Remember: if a system simply doesn’t work for you (this is not the same as you not working a
system!), then it would be better for you to cut your losses and test a different system rather
than continuing to waste time, energy and your trading equity.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 6
Another important aspect and huge element of success or failure in Forex trading is… your
broker. Your broker is the other half of your trading success – the match to your successful
trading system.
In the next part of this report, we’ll focus more on brokers – you’ll learn many secrets and
“insider information” that will help you to understand and deal with different kinds of brokers.
You’ll find that the information outlined in this report is mainly based on real trading
experience over many years - that’s why it’s very practical and makes the results & goals very
achievable.
Throughout, we’ve tried to keep the language used as simple and clear as possible -
complicated and/or technical terms have been avoided wherever possible to avoid the need for
further explanation.
Hopefully you find it useful and find at least one word, idea or piece of information that you can
use to your benefit to create a successful trading experience.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 7
5 THINGS YOU MUST ASK A FOREX BROKER BEFORE OPENING A LIVE ACCOUNT
When most traders start their trading journey and take their first steps in this market, they
usually focus on getting the best system or the best trading course. However, when it comes to
choosing a broker, it seems like they focus equally hard on finding the worst ones!
That may seem harsh, but it’s true. There could be many reasons for making the wrong choice
of broker but we suspect the main reason is simply that they don’t know what they should be
looking for.
Always remember that your broker could be your best business partner... or your worst trading
enemy.
In this chapter, we will discuss the 5 most important things / questions that you must ask any
Forex broker before you consider opening a live account.
Fortunately, you don’t always need to contact a broker’s support team with a list of questions.
First, try searching the company’s website - in most cases, you’ll find detailed answers to most
of the important questions and, you may well find answers to questions you hadn’t thought of.
Of course, if you don’t get all of your questions answered then go ahead and contact them –
you’ll probably have other questions in your mind by that time anyway.
The questions mentioned below are the ones we believe are most important to ask, but it’s
certainly not an exhaustive list so feel free to add anything else you consider important, along
with anything you found unclear when reading through their website.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 8
1. ARE YOU AN ECN/STP OR MARKET MAKING BROKER?
There are two main types of brokers. ECN/STP (Electronic Communications Network / Straight-
Through Processing) brokers and Market Making Brokers – your job is to find out exactly which
kind of broker you’re about to trade with.
ECN/STP brokers provide their clients with a data feed that comes directly from the banks and
major economical institutions that they work with, or from banks and financial institutions plus
other individual traders. That means you’ll either get your rates and prices directly from the
market itself or from a marketplace made up of many different resources, including other
traders.
With ECN/STP brokers, there are no fixed spreads – you’ll notice that spreads vary from time to
time, and from one pair to another - sometimes you’ll see no spread at all and perhaps even
see instances where the Bid (selling) price is higher than the Ask (buying) price!
Being able to “buy low” and instantly “sell high” is fairly rare, but it does happen regularly with
ECN/STP brokers.
Another useful (depending on how you view it) aspect is that there are no “re-quotes” or order
confirmations. This means that you can trade news releases without any issues with getting a
fill but you should be prepared to see confirmed fill prices vary some way from the expected
price during the “fast market” conditions that exist during news releases.
Market makers, by contrast, are brokers who “make” or create their own prices and display
them on charts for their own customers or clients. By doing so, they “add liquidity” to the
market itself and their activities would affect prices in the market. That’s why they’re called
Market Makers.
Of course, the prices they offer their own clients are still within a reasonable range because
there are other market makers in the industry and all of them are competing against each other
in a bid to attract more clients.
As a market maker, they profit from the spreads they offer on each order.
To cover that, they may pass some orders to competing traders within their own pool of clients
and, at other times, they may simply hold your orders and trade against you. In other words,
they make more money when you lose!
ECN/STP brokers offer low spreads, and sometimes no spreads at all, but you’re exposed to the
market and any sudden moves. That makes it the best choice for scalping quiet sessions like the
Asian session.
Market makers are always looking to expand their client-base so you’ll usually find them
offering better trading platforms, many bonuses, an easier withdrawal/deposit process plus
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 9
many other options and features that you won’t easily find with the majority of ECN/STP
brokers.
These “advantages” can appear extremely tempting, but you have to balance that with the
reality that the broker may trade against you, and they’re able to apply price manipulation
tricks to make you lose.
So, when you’re looking for a Forex broker, look for one that works best for you based on your
own needs, plans and strategies.
Fortunately, many brokers now allow very small opening deposits, so there’s certainly nothing
wrong with testing several brokers at the same time if you wish – just remember to take your
time and give them all an equal chance during your testing and researching phase.
Naturally, keep the info provided by them in mind but, most importantly, focus on your real-
life, practical experiences with each one. In other words, focus on what they’re actually doing,
but always remember what they said.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 10
2. WHICH TRADING PLATFORMS DO YOU PROVIDE?
There are essentially three kinds of trading platforms: Web-based platforms, desktop-based
platforms, and mobile platforms.
As you’ll soon discover, there are advantages and disadvantages to each kind.
Web-based platforms are generally easier to use and, in most cases, they’re designed for
beginners so you won’t normally find many useful tools or “cool” features included with them.
Even though they’re more “basic”, you should expect to experience the odd technical issue with
some of them, even if it’s just requiring the use of a particular web browser or the installation
of additional software i.e. Java. Ultimately, it just depends on how well the platforms are
designed and developed.
Desktop platforms are usually much more advanced and commonly provide more trading tools,
such as indicators, strategy testers and even auto-trading options. The downside is that they
need to be installed on your computer so they can’t be accessed quite as easily and freely as
the web-based platforms.
Mobile platforms are relatively new, but they’re easier to use than desktop platforms and offer
more options and better features than most web-based platforms. Just like desktop platforms,
you need to download and install them onto your mobile device in order to use them… in most
cases, at least. Being a new concept, many of them are still really “Beta” test products and, due
to the much lower processing capabilities of mobile devices, it’ll still be some time before they
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 11
catch up with their desktop counterparts and become really effective from a trading stand-
point, though they’re still useful tools for monitoring what’s happening with your account.
Why is asking your broker about their platforms so important?
The most obvious reason is because you want to know what options you’ll have available if you
decide to trade with them. More important, however, is because you may want to use specific
trading software and/or trading systems that require a specific trading platform. For example, if
you intend to use auto-trading software that works with the MT4 platform, you need to ensure
that you join a broker that supports it.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 12
3. WHERE ARE YOU LOCATED AND ARE YOU REGULATED?
When looking for a Forex broker, always try to work with a regulated broker.
As a financial company, a broker should be regulated by a proper regulatory & supervisory
body. However, there’s no world-wide agency or institution that regulates all brokers and
financial companies. Each country has its own regulatory rules/laws as well as its own
supervising agencies.
If your broker is mainly located in the UK, for example, you should ask if it’s regulated by the
Financial Services Authority (FSA UK), which is the regulating body for the UK. If it’s located in
the USA then it should be regulated by the National Futures Association (NFA).
Why this is important?
Because the regulation status of your broker provides indicates the level of protection available
to you and your investment.
If the broker isn’t regulated, that can means that you’re actually giving your money to total
strangers without any protection or guarantees of any kind.
That’s not to say that all unregulated brokers are bad – some countries, such as Finland, do not
have a separate financial services regulatory body, but their standard corporate regulatory
framework (which applies to all companies equally) is as stringent - perhaps even more so -
than the financial services regulations in countries that choose to appoint specific bodies.
Here is a list of some countries and their regulations agencies:
Canada: British Columbia Securities Commission (BCSC) - Canadian Investor Protection Fund
(CIPF) - Financial Transactions and Reports Analysis Center of Canada (FINTRAC) - Investment
Industry Regulatory Organization of Canada (IIROC) - Ontario Securities Commission (OSC)
France: Autorite des marches financiers (AMF) - Banque de France - Credit Institutions and
Investment Firms Committee (CECEI)
Germany: Federal Financial Supervisory Authority (BaFin)
Japan: Financial Services Agency of Japan (FSA Japan) - Japan Securities Dealers Association
(JSDA) - Japan Investor Protection Fund (JIPF) - Tokyo Commodity Exchange (TOCOM)
United Kingdom: UK Financial Services Authority (FSA UK) - Financial Services Compensation
Fund (FSCS)
United States: Commodities and Futures Trading Commission (CFTC), Financial Industry
Regulatory Authority (FINRA), National Futures Association (NFA), New York Stock Exchange
(NYSE), Office of the Comptroller of the Currency (OCC), US Securities and Exchanges
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 13
Commission (U.S. SEC), Chicago Board of Trade (CBOT), Securities Investor Protection
Corporation (SIPC).
The above list is not exhaustive but provides a good sample of countries and the agencies
available that regulate Forex brokers.
If the broker doesn’t provide any details regarding their registration and regulation, simply ask
them for it. If they provided general information, feel free to contact the relevant registration
agency and ask about the broker’s registration status. There’s nothing wrong with being
thorough. Actually, that’s why these agencies are there and partly why they’re operating in the
first place.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 14
4. WHAT KINDS OF ACCOUNTS DO YOU OFFER? CAN I OPEN A FREE DEMO ACCOUNT?
Demo (or practice) accounts, are free accounts offered by most brokers.
The reason is so that prospective clients can “test-drive” the broker’s platform and review their
available options, features and benefits before deciding to open a real, live account with them.
In addition to demo accounts, the main types of trading accounts offered by most brokers are:
Mini/Micro accounts:
Many brokers now provide mini and micro accounts for their clients, both of which allow you to
open a real live trading account with the broker and deposit as little as $25 to $500.
Most of these mini and micro accounts are provided with additional educational material and
many trading tools because brokers know that 90% of people opening mini and micro accounts
are either beginners wishing to learn more about Forex trading or traders wanting to see how a
real account performs with a particular broker before opening standard account.
With a mini account, you can start trading with a small deposit and experience many, but
usually not all, the features and benefits of larger accounts. Micro accounts generally offer the
same features of mini accounts (though some include additional restrictions appropriate to the
account type) but you would be trading even smaller contract sizes, and therefore even less
risk.
Standard Accounts:
With standard accounts, the minimum opening deposits are higher - depending on the broker,
usually in the $5,000 to $10,000 range. Some brokers offer “VIP” accounts which are very
similar to standard accounts but include additional benefits, features, priority support, etc.
Standard accounts will normally come with access to more trading features than mini and micro
accounts – sometimes even professional support and training teams. The trade-off is that
leverage is generally much lower than for mini and micro accounts.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 15
5. WHAT’S THE MINIMUM DEPOSIT REQUIRED, AND WHAT WITHDRAWAL / DEPOSIT OPTIONS ARE THERE?
The minimum deposit will primarily be dictated by the account type, but the exact amount will
depend on the policies of the brokerage.
For example, two brokers may be offering fairly similar micro accounts, yet one may allow a
minimum deposit of $50 while the other could insist on $300 from their clients.
It’s also important that you know how the process of depositing and withdrawing funds works.
Some brokers offer many options for depositing funds to your accounts but very few for
withdrawal.
For example, their deposit options may include credit/debit cards, checks or money orders,
bank wire transfers, Western Union, Paypal, Moneybookers, etc.
By contrast, they may restrict withdrawals to perhaps check or bank wire transfer.
Needless to say, the more options you have available for both deposit and withdrawal, the
better.
For example, many brokers now offer the option to withdraw money to debit/credit cards.
Sometimes, debit cards are offered by the brokerage. These are normally branded cards issued
by independent companies (such as Payoneer) and they’re connected to your trading account.
When you want to withdraw funds from your account, you either log-in and submit a request or
email a form to the broker. Either way, the funds are credited to your debit card within 2 or 3
business days and you can then withdraw the money in cash from any ATM machine or use the
debit card to make purchases as normal.
This option is relatively new, but the number of brokers offering it is growing quickly so you
may wish to consider that when looking for a new broker.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 16
6. DO YOU ACCEPT US RESIDENTS? (YES! – WE KNOW WE SAID “5 QUESTIONS”, BUT…)
…This is an important point that now needs to be considered very carefully by many people so
this section is going to lay out the implications in very clear and simple terms.
If you think that you already know everything and can just skip this section… DON’T!
Until fairly recently, almost anyone, anywhere, could open an account with almost any
brokerage in almost any country... then the NFA (National Futures Association) and the CFTC
(Commodity Futures Trading Commission) in the US passed new laws!
The new laws essentially affect how US-based brokerages (or non-US brokerages with material
links to the US) are required to deal with US citizens.
So, let’s explore further to understand exactly what those new laws affect and what that means
to the average trader…
In the “good old days”, all brokerages offered a fairly common set of features to all traders
wishing to open an account. The most important features were:
1) High leverage rates
This is the amount of deposit you require to open a given size of trade.
Most standard accounts offer “100:1” leverage i.e. you need $1.00 in your account to
trade $1,000.00 of real money.
Many micro / mini accounts offer as much as “500:1” or higher. At 500:1, you only need
$0.20 in your account to trade $1,000.00 of real money.
The availability of high leverage, whilst demonized by the NFA and CTFC, makes it easy
to open real accounts with very small deposits and learn to trade Forex with all of the
“emotions” that come from real trading, yet risking very little in terms of real cash.
Under the new regulations, US citizens are restricted to 50:1 on “majors” (EURUSD,
GBPUSD, USDCHF & USDJPY) and just 20:1 on all other pairs. That means the amount
required by a US citizen to trade $1,000.00 of EURUSD (a “major”) is $2.00 compared to
just $0.20 for a non-US citizen. For currencies like AUDUSD (a “minor” or “exotic”), that
jumps to $5.00 while non-US citizens still need just $0.20.
This may not seem like much of a deal when you look in terms of a few dollars BUT,
when you remember that a standard contract is $100,000, reality starts to set in!
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 17
Putting this into perspective, a non-US citizen trading 1.00 lots of AUDUSD with 500:1
leverage would require a deposit of about $200.00.
A US-citizen attempting to trade the same size and currency pair would require a
deposit of $5,000.00!!!
So, as you can see, a non-US citizen can comfortably place quite large trades with even a
$500 - $1,000 account whereas a US citizen would need to deposit 25 TIMES more with
their broker for the same trading flexibility.
2) Full hedging
This allows you to have open buy and open sell trades on the same currency pair at the
same time.
This may seem unimportant but, most traders will typically trade multiple strategies and
systems on a given currency pair – for example, a short-term “intra-day” strategy
combined with a longer-term “swing-trading” strategy.
In the above example, there may be a buy trade already open for the swing-trading
strategy but the trader can see price dropping during the day and wants to place a sell
trade to catch a few pips.
If the trader is a non-US citizen then, after opening the sell trade, it’ll appear in the trade
terminal as a separate position that can be easily identified, managed and closed
(hopefully with a profit!)
However, if the trader is a US citizen then, after opening the sell trade, the terminal will
aggregate the positions and the existing buy trade from the swing-trading strategy will
be closed at the current market price. This is because the new US trading rules do not
allow for individual positions to exist, only an aggregate position for the account.
Whilst it’s possible to manually keep a tally of positions for different strategies, it’s a
very unproductive way of trading – after all, computers were supposed to make things
easier for us, weren’t they?
However, that’s not the worst part…
First, this “aggregate position” approach means that the vast majority of automated
trading systems are unable to function since they can’t track the trades they placed
Second, running multiple automated (or a mix of manual and automated) strategies on
the same account becomes pretty-much impossible
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 18
Unfortunately, this “aggregate position” nonsense (and the 50:1 / 20:1 leverage limits)
will be forced on anyone trading with a broker based in the US.
Initially, several brokers opened off-shore subsidiaries, moving the accounts of all non-
US citizens to the subsidiaries, along with the accounts of any US citizens requesting
more flexible trading conditions.
Whilst that ploy worked for the non-US account holders, additional rules were soon
passed by the NFA / CFTC which forced brokers to “repatriate” all accounts belonging to
US citizens to the US parent brokerage and to re-instigate their restrictive policies.
Sadly, most non-US brokerages now display very clear “No Us Citizens” signs, but there are still
a very small number of non-US brokerages able to accept US citizens without enforcing any of
the NFA / CFTC rules.
Having said that, a common retort from US traders is “I’m afraid to open an account with an
overseas brokerage because I’m worried about the level of protection available for my funds”.
Two casual observations are:
1) Investor compensation schemes in non-US countries are frequently far more
comprehensive than the scheme operated by the NFA
2) The biggest brokerage failures / scams to hit the news in the last several years, and the
biggest losses / thefts of client funds have been perpetrated by US brokerages!
So, now that you essentially know what to ask and what to watch for, how exactly can you get
the answers you need?
First, try to check the broker’s website. You’ll usually find the majority of answers (often more!)
on their FAQ page or in other informational and educational sections.
If not, simply contact their support staff by email, web-form, live-chat or even by telephone.
Live-chat is a real plus and offered by most brokerages nowadays via a frequently prominent
“Click Here” link or button
Remember that this is likely to be your first contact / experience with the broker so, if their
support team answers your questions knowledgeably and within a reasonable time (allow 24-
48 working hours for email), then you can safely expect good communication from them if you
decide to open a live account.
If their support team responds slowly for no obvious reason, or their answers were vague / not
relevant to your questions, then you should consider it a taste of things to come.
If you’re happy with the brokerage and all your questions have been answered, start by
opening a demo account.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 19
Demo accounts shouldn’t be used to evaluate your expected trading results – this is a very
common mistake. They should only be used to evaluate things like the trading platform, general
support, trading tools and educational material, etc.
The reason why demo accounts shouldn’t be used to evaluate expected trading results is that
brokers will try to provide unrealistic conditions (extra-narrow spreads and/or great fills, for
example) for their demo account clients to coax them into opening a real account. That’s also
the reason why demo account results shouldn’t be considered indicative of potential results
trading a real account. The only purpose of demo trading is to test the broker’s trading tools
and services in general, and also testing your trading system and your trading strategy to make
sure that, for example, all indicators needed or used by your strategy are available in the
broker’s trading platform.
Although most brokers allow actively-traded demo accounts to last indefinitely, you shouldn’t
rely on a demo account remaining active beyond about 30 days. In fairness, you should have
completed any sensible evaluation within that time but, if you need longer and your demo
account has expired, simply open another one – at worst, you’ll just have lost your trade
records from that period of time.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 20
FOREX BROKERS, BACK TO THE FUTURE
Several years ago, you could easily choose a broker to trade with, mainly because there were so
few brokers available to choose from and, to make things even simpler, most of them were
offering the same, or very similar, features and benefits to new traders.
Also, back then, most brokers were fairly limited in several ways, so it was quite normal to see
the majority of them providing the same trading platform, MetaTrader, and sometimes a
simple account management tool.
Some tried to be “special” and were able to introduce new traders to their own web-based
trading platform, one that was designed with minimum options and features but worked fine
considering that they were usually just an order management platform without any market
analysis options or advanced features.
The odd brokerage firm pushed the envelope and actually provided some highly advanced
platforms in addition to the common platforms available, topped off with some valuable
bonuses and extra services - ebooks, trading courses and daily market analysis, etc.
Back then, the most common questions asked by new traders were focused on simple things,
such as the minimum deposit required to open an account, whether mini / micro accounts were
offered or just standard accounts, how funds could be withdrawn and long that took, etc.
Years later, many more brokers have appeared with more trading options and more advanced
features for their trading platforms.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 21
Faced with this “population explosion”, we quickly learned that choosing a broker wasn’t as
easy as it sounded. We also discovered that some Market Makers had evolved into ECN/STP
brokers, micro accounts were an expected offering, and no-swap (Islamic) brokers were
becoming common. Some of us were surprised to see the first of the NFA rules being
announced, and everyone got to witness how that affected this business – both from the
perspective of the trader and the broker.
So, things got a little more complicated for beginners, but it also got better! On the negative
side, you now have to check many details before opening a trading account with a broker. You
need to look past the many fake affiliate review sites, and you need to be up to date with the
new trading rules and regulations. On the positive side, there are many more options available
for you and many new benefits offered by the hundreds of brokers worldwide. All of them are
“fighting” to get your attention, win your trust and convince you to open a live account with
them.
Years ago, demo accounts were new “tools” that helped attract members to test-drive a
broker’s platforms and check out their trading benefits. Today, demo accounts are a standard
option and certainly not enough to attract anyone alone. That’s why it’s normal to see many
brokers offering unbelievable bonuses like trading signals and even “cash” to prospective
clients.
So, when looking for a broker today, you need to keep many details in mind, ask specific
questions and keep looking until you hear the right answers before joining any brokerage firm.
You should also spend more time testing their overall performance - especially their trading
platforms because, as a trader, that’s what you’ll have to deal with every time you wish to
place, edit or close an order or even review your trading account.
So, let’s talk about the main trading platforms available today… but before we do, allow me to
clarify a specific and important point:
“The platform works for the broker, not the other way around”
That means you should always look at the broker first - investigate, research, ask and then…
your last step would be testing the platform.
Why? Because, if the broker turns out to be unreliable or, even worse, a scammer then the
platform isn’t going to help matters, even if it’s the best trading platform in the world.
With that out of the way, let’s get started…
Web Based Platforms:
Web based platforms are trading platforms that you access online using your normal web
browser. They’re basically part of the broker’s website and they’re built using advanced web
programming languages.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 22
The features and options available depend on the broker’s systems and aspirations but, in
general, it’s not likely to be much more than a basic trading platform for processing orders,
though some are quite well engineered and also provide you with different kinds of trading
tools and helpful applets.
Most, however, don’t provide much in the way of advanced technical analysis options - even
when they do, the browser-based nature of the platform usually imposes limits.
However, if you’re trading manually and all you need is a platform capable of processing orders
from anywhere - anytime, then web-based platforms are probably your best choice.
If, on the other hand, you want a trading platform with more powerful trading capabilities then
you may wish to consider some other options.
Keep in mind that if you’re planning to use a trading system/strategy with specific requirements
then you must ensure that those requirements are available in the trading platform offered by
your broker.
If not, you really only have a couple of choices… change system/strategy or change broker!
Actually, there’s a third option… use a demo account with another broker that supports your
strategy and place the trades in your broker’s platform when a signal occurs.
We know that sounds like a lot of messing around, but it’s always better to know what your
options are, even if you’re not actually going to take advantage of them.
On the other hand, if you do decide to take that route and trade using two different brokers,
you should ensure that they’re both of the same “species”… both are ECN/STP or both are
Market Makers – at the very least, try to find a pair of brokers with identical server time offsets
and minimal differences in their price feeds.
It may sound confusing, but sometimes, different kinds of brokers can exhibit noticeable
differences in their data feeds. That basically means that, at times, you may see price levels in
the platforms acting in different ways - not in a way that would affect the major trend, of
course, but in a way that may affect the open/high/low/close shape of some candles.
Remember, Forex might be one big marketplace for currency prices, but there’s no centralized,
physical location for it (as there is with stocks and commodities) - price sources are the various
different banks and financial institutions around the globe.
This sometimes affects what you see on charts from different brokers because different brokers
will obtain their price feeds from their own choice of institutions. Some minor (or major)
manipulation by the broker might also creep in, but that’s another issue altogether!
Anyway, if you don’t want to be bothered by things like that, simply choose a different platform
(or broker), and resolve the issue that way. After all, most brokers today provide multiple
methods for trading, which usually include a variety of platforms.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 23
It’s actually very rare to find a broker with only one trading platform so, if you run across one,
we suggest you ask why – it may just be due to the preferences / requirements of their clients,
or perhaps that they’re underfunded as a company (or it’s a scam broker that just set up).
NOTE: Whenever you use a strategy that involves timeframes higher than H1, it’s important to
know how that might affect the signals produced so you may need to contact the strategy
developer for recommendations.
For example, a strategy using indicators on the H1 (or lower) timeframes will work almost
identically, regardless of broker, but signals from a strategy using indicators on the H4 (or
higher) timeframes will probably give quite different results, depending on the time offset of
the broker’s server. This is because the difference between GMT and the broker’s server time
will affect when each H4/D1/W1/MTH, etc. candle starts and ends.
So, if an H4 strategy was developed using a broker’s server set to GMT, the H4 candles would
consist of the 00:00-03:59, 04:00-07:59, 08:00-11:59 GMT H1 candles, etc.
If your broker’s server is set to CET+1, for instance, your H4 candles would consist of the 02:00-
05:59, 06:00-09:59, 10:00-13:59 GMT H1 candles, etc. which would result in quite different
indicator levels.
This simple, yet often overlooked, issue is very likely to be the reason why some strategies you
may have purchased in the past just didn’t perform well for you.
Desktop Platforms
Desktop platforms are trading platforms that can be used on your computer – PC, MAC or both.
They’re basically standalone applications that you need to install on each computer you wish to
trade from.
That means, unlike with web-based platforms, desktop platforms can’t natively be accessed
from anywhere, at any time.
There are workarounds for this – you can install the application on a VPS (Virtual Private Server
– essentially a computer in a datacenter that you rent and access via a special kind of browser)
or use a remote-access system (such as VNC or LogMeIn) to take control of your home
computer from elsewhere.
If you intend to install a desktop platform on multiple computers in order to trade / monitor the
same trading account, remember this very important point:
Only ever install an auto-trading script into one instance of the trading platform
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 24
The reason for the warning is this: if multiple instances of the trading platform are running the
auto-trading script then you have an almost 100% chance that duplicate orders will be opened,
and that could result in heavy losses and/or incorrect management of the duplicate orders.
As you probably remember, desktop platforms are usually far more advanced than their web-
based counterparts. Because they’re using the processing power of your own computer, they’re
able to support many more trading options and features, including order processing, account
management, technical analysis, and sometimes fundamental analysis as well.
There are only really two kinds of desktop platforms.
The first kind is developed by a specialist 3rd-party software company and then licensed (and
sometimes “branded”) to as many brokers as possible. Each broker can then either provide its
own data feed for the platform or use the developer’s data feed. Usually both options are
available.
A great example of this is the MetaTrader platform, which is available from around 95% of
brokers worldwide.
The second kind of desktop platform is one designed and developed specifically by and for the
broker itself and only available to their clients.
A good example of this type is GFT’s “DealBook 360” which has some good, bespoke features
for manual traders but is very basic in terms of automated trading capabilities.
So, which one is better?
Well, that depends on the broker itself. Remember: the platform works for the broker, not the
other way around.
One observation is this: developing a trading platform requires huge financial investment, so
any broker that’s taken that route is extremely serious about their business and highly likely to
provide good service.
As always, though, be safe and investigate the broker itself before bothering to test their
trading platforms to any great extent, selecting the one that provides what you need.
There is, technically, a 3rd type of desktop platform but you’re unlikely to encounter one. Some
traders require very specific functionality for their strategy and therefore develop (or have
developed) their own “trading platform”. These platforms are usually only able to provide the
minimum functionality to support the trader’s requirements so there aren’t any of the bells and
whistles common to public trading platforms.
Unless you befriend a professional trader (or become one yourself), you’ll probably never have
a “Close encounter of the 3rd kind” ☺
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 25
Mobile Platforms
Relatively new to the trading scene, mobile trading platforms were introduced a few years ago
(mostly thanks to the advent of “smartphones”) as another option for traders who prefer
“mobile” trading.
These platforms are a “middle ground” between the web-based and desktop platforms.
As applications, they usually provide more powerful features than web-based platforms but,
due to the memory and processor limitations of mobile devices, they’re unable to provide the
full feature set of their desktop cousins.
As with desktop platforms, you still need to download and install these platforms onto your
mobile device, where you’ll then have access to a good selection of available options and
features.
They’re definitely good to use if you’re after a faster way to place orders, check your account
and manage trades than web-based platforms allow… but if you’re planning to do any advanced
work then you should really use a desktop platform instead.
As previously mentioned, mobile platforms are relatively new so features are being expanded
as mobile devices become more powerful.
If it’s your first experience with a mobile platform then expect to experience some initial
technical issues, but you shouldn’t have too much trouble getting the platform up and running
(get help from your broker if necessary) and then you’ll have an alternative way to access your
account in the need arises.
While mobile platforms aren’t quite there yet, they still represent the future – or part of it, at
least – for trading online so you may want to keep an eye on developments and updates. You
could also consider the fact that a broker is offering mobile platforms as a sign that they’re
looking to the future themselves and aiming for long-term success in this business.
Metatrader 4
MetaTrader 4 is a desktop platform (though a less powerful mobile version is also available)
that allows you to use basic and advanced trading features with a variety of market analysis
tools.
Famous for its unique MQL coding language, it allows traders (as well as programmers) to
develop many kinds of indicators and to create both simple and complicated auto-trading
systems.
It’s best known, however, for its ability to support complete auto trading systems – aka Forex
robots.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 26
Since its initial release, MT4 has undergone significant and constant improvement, resulting in a
very stable platform with good overall performance.
For these reasons, many traders have become addicted to MT4. They’ve used it as their main
trading platform for years, and have worked with it to create many kinds of strategies and
trading systems.
The platform, itself, is very flexible. You can customize its appearance and, if you possess (or
wish to learn) some basic coding skills, you can start to create your own indicators and auto-
trading software. In fact, you can do that even without any coding skills as there are now “visual
designers” for MT4 that allow you to create complex indicators and automated strategies
without knowing a thing about coding – you only need to know what the indicator or strategy
should do and then draw out the logic. These systems mostly require purchasing but some
brokers will include them as a bonus for funding a live account.
Anyway, all that is great but, what need to focus on here (regarding Forex brokers), is you’re
your intentions are. If you’re planning to use auto-trading software / Forex robots (otherwise
known as Expert Advisors) and you want a wide choice of brokers to pick from, then MT4 isn’t
an option any longer - it’s a must.
By far, the widest selection of Forex robots (commercial and free) is designed to work on the
MT4 platform and aren’t compatible with other platforms. Some other platforms claim
compatibility with MT4, but it’s safer not to risk potential issues – especially when your hard-
earned money is being traded!
Why else should you use MT4?
Well, primarily, because it’s very easy to use - especially if you’re a beginner. The interface is
simple and clear, keeping all of the advanced features “hidden” to avoid causing unnecessary
confusion. If you’re an advanced user, however, and wish to take advantage of the advanced
options and features then you can easily reach them within few clicks.
Second, it’s immensely popular! That means, you will have no problem looking for guidance and
help from other users or developers and there’s no shortage of MT4 websites and forums.
Third, it’s supported by almost all brokers so, if you’re currently working with MT4 and decide
to change broker for any reason, there’s an excellent chance that your new broker will be
providing MT4 as well (in addition to any others they offer). That means you don’t have to start
all over again, wasting valuable time learning how your new broker’s platform works.
Another reason is that it’s an “all in one” platform. There’s no need for any additional software
or supporting platforms to make it work properly.
What about the new MT5?
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 27
The MetaTrader 5 platform is a new trading platform from the MetaQuotes company that was
designed to embrace the new regulatory requirements of the NFA/CFTC for US traders.
Some traders consider it to be an upgrade to their popular MT4 software while others consider
it a retrograde step. You’ll notice many similarities, and also many differences, between the
two platforms.
The interface of MT5 is much simpler and less “cluttered”, with only few buttons for the main
options that you need to use regularly. All of the advanced options and features (and more!)
are still there, behind the scenes, and accessible with just a few clicks… if you remember how to
use MT4.
When you use MT5, you’ll notice the new “news calendar” - no need to leave your trading
platform to check outside sources for economic news releases now… simply open your built-in
calendar, check the news release schedule and begin trading. For even easier access, lines and
labels are added to charts that show exactly when each economic news event is going to be
released and, by clicking on the line/label, you can see the full details and expected impact of
the event in the calendar itself.
Programmers and coders will also notice that the MT5 editor makes coding a lot easier, and
there are many new, helpful features have been included too.
On the negative side, MT5 uses a new coding language called MQL5 which, unfortunately, is far
more complicated than MQL4 and isn’t backwardly compatible.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 28
That means your MT4 indicators and robots won’t work with MT5 so, if you’re thinking of
“moving up”, be aware that you’ll have to leave all your existing MT4 systems and add-ons
behind, and start from scratch with MT5.
There are more indicators, experts and scripts being developed for MT5, but there still aren’t
many when you compare with MT4 – this is partly due to the fact that MT5 is still really a “beta
release” and, so far, there’s been minimal interest from brokers and traders alike.
However, the platform itself looks promising – it just needs a lot more time to evolve before it
can be considered a viable replacement for the MT4 platform.
One additional thing to note regarding MT5 is that it works according to NFA rules.
That means: No hedging and adoption of the FIFO (First In, First Out) rule.
If these two aspects could be turned off for non-US brokers (and backward compatibility with
MQL4 added) then MT5 would be an ideal platform for almost everyone. Sadly, it’s not possible
at the moment but we’d like to hope that MetaQuotes take notice of their users and add the
missing functionality that’s clearly holding back adoption of their new platform.
So… Where to go from here?
If you’re interested in trading platforms then, by all means, go and test as many as you can.
There are many platforms available now (which should keep you busy for quite a while) and
even more coming out all the time. The only thing to keep in mind is that you’re not so much
evaluating the platform as you are the broker. That means you should focus on all other
features and services provided by the broker, not just their platform.
If you really want to understand this reasoning from a practical perspective, try opening demo
accounts with two different brokers… for simplicity, let’s say an ECN and Market Maker, and
download, install and trade with their platforms (it’s best if both offer MT4).
After few day of demo trading (especially if you used a Forex robot), you’ll notice just how
differently both platforms are performing - either working for you, or against you!
It’s the same platform - MT4 - with the same features and the same options, but… everything
else is different because those platforms are working for different brokers.
You may see different data feeds, slower/faster server connections, different delays in
placing/updating/closing orders, etc. – either way, prepare to be surprised.
So the point here is that you’re not dealing with a common, independent trading platform,
you’re actually dealing with the broker working behind that platform.
Remember too that the performance of the trading platform isn’t just a factor of the platform
itself, but also depends on the broker providing it.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 29
BEYOND ECN & MARKET MAKERS
The main role of a Forex broker is to make money by helping individual traders and/or trading
companies to speculate in the Forex market. With the rapid increase in the number of available
brokerage firms today, we can see clearly that their role is now much more expansive and
involves far more than just helping you to place orders.
Brokers today have found it necessary to provide extra services and bonuses, along with almost
anything else that might appeal to you as a prospective client, or has the potential to help you
make trading a profitable experience.
• They provide you with multiple trading platforms to choose from.
• They provide you with cash bonuses on your deposits.
• Some of them help by providing free (or subsidized) VPS hosting accounts.
• Others even provide professional trading courses, signals and market analysis.
This all makes for a very confusing time - searching for the best (or even just a good) Forex
broker can be very difficult these days… especially with marketing hype everywhere you look.
What makes things worse is that some brokers pay for reviews and/or spread their name online
by creating fake review websites.
But it’s worth all the trouble of doing your research; and you really have to do it if you want to
trade the Forex market without worrying about your broker all the time.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 30
Imagine that you’re investing a new business, and according to this business plan, you have to
give your hard-earned money to a total stranger… and we could be talking about thousands of
dollars here.
Not just that, the plan specifies that this stranger is to hold all profits from the business and will
require you to follow a “withdrawal process” that could take days or weeks before you actually
get your hands on the profits you may have made.
Now imagine that you’re actually investing your life savings, retirement fund, or even borrowed
money (that’s a huge mistake - never speculate with money that you can’t afford to lose)…
what would you do to insure that your money’s protected in this new business partnership?
Whatever steps you thought you’d take to protect yourself, you’ll find there’s an almost
equivalent process when it comes to dealing with brokers. However, the first, and most
important, step is to understand how this partner/broker works.
There are essentially 3 kinds of brokers but, before we explain what they are, you need to
understand that:
1. All of them are in this business to make money
2. They’re not banks (even when they are), they’re companies and trading firms
3. None of them is perfect, no matter what you hear or what you think.
ECN - Electronic Communications Network - Brokers
ECN brokers simply pass price data from their sources - banks and financial institutions - to their
trading platforms. They make money from the commissions they take every time you make or
close a trade.
ECN brokers shouldn’t be making money from the transaction spreads themselves as they only
provide you with current spreads in the market according to their price sources.
The good part is that, under normal market conditions, you get very low spreads - sometimes
no spread at all (Bid = Ask), and sometimes even negative spread (Bid > Ask).
However, under specific market conditions i.e. fast markets, important news releases, etc.,
spreads - as received from their source – are going to be much higher than usual.
Clear commissions and fees, low/no/negative spreads, and direct dealing with the market all
help guarantee that you have a fair chance to get the best from your trading system but, it also
means that you’ have to face the wild side of the market from time to time.
If you have at least basic trading experience then ECN brokers are the ones to go for if you can -
especially if you’re planning to trade with a large account.
What you need to test thoroughly when starting with ECN brokers are their trading platforms.
Many ECN brokers provide poorly designed platforms which have few (or no) safeguards to
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 31
prevent you from making a mistake so, if we were you, we’d spend a while testing any new
platform provided by an ECN broker, or simply choose a broker that offers the MT4 platform.
Market Makers / Dealing Desk Brokers
Market Makers are brokers who create price data for their clients. In other words, they receive
market prices from their sources – let’s say with 1 pip spread – and then resell to you with a 3
pips spread.
Most Market Makers will also “profile” their clients to see how successful they are. Considering
that around 95% of traders lose money, profiling probably isn’t the most difficult job for the
staff of a Market Maker!
Anyhow, once a trader has been profiled as statistically likely to lose on each trade, the Market
Maker will often try to make some extra profits by covering that trader’s positions. If you
compare profiling to spread income, it’s easy to see why this would be attractive to a broker:
Let’s assume that a trader is using a strategy with a 20 pip profit target and a 50 pip stop loss.
Let’s also assume that the trader is fairly average and wins 7 out of 10 trades.
If the Market Maker simply offset all trades against trades of their other clients, they’d only
make the mark-up on the spread for each trade (say 2 pips) so, for 10 trades placed, they’d
make 20 pips profit.
By covering the trader’s positions, the Market Maker would lose when the trader won, and vice
versa. With a 70% win rate, that would result in 7 x 20 (140) pips lost by the broker + 3 x 50
(150) pips won… plus they get the 20 pips from the spread mark-up too. That equates to a 50%
increase in profit for the broker… even more if the trader screws up a trade here and there.
So, for them, you’re not just a client that they provide a service to… you’re also a customer.
That means, at some point, you can expect them to “play dirty” if you start improving on that
70% win rate, because they can’t always offset your trade against another customer so you’d
then be forcing them lose money.
So what can you expect? Platform freezes during news events, enormous increases in spreads
and large “hiccups” or “spikes” to hunt your stops – these are the most common methods do
level the playing field (from their perspective!). Of course, your strategy may not lend itself to
such tricks, in which case you can expect the kind of email that a member of our team actually
received from a Monaco-based broker back in 2009: “If you continue trade your current
strategy, we will be forced to suspend your account and each of the linked accounts you are
managing”!
Now, before you start cursing them, ask yourself this: If they’re so “evil”, why are they still in
business? The answer is, because they still provide good service… for specific traders.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 32
Ultimately, Market Makers are great for beginners because they provide low, fixed spreads
during normal market conditions. They also offer many helpful tools and trading platforms,
they’re usually a lot easier in terms of account management (deposits, withdrawals, etc.), you
can open an account with a lower initial deposit and they, almost without exception, offer
micro accounts.
So, they’re not that bad… if you know what to expect and how to deal with them!
If you’re planning to open small account, need a user friendly platform and easy/fast
management of your account, then you shouldn’t dismiss joining a Market Maker.
STP (Straight-Through Processing) Brokers
STP brokers are hybrids who sit between ECN brokers and Market Makers. They use a very
complicated algorithm to continuously learn if a trader is being successful or not and, based on
this information, their system decides (in real-time) how to operate and process the orders.
For example, if a trader is being successful then they’d pass his orders directly to the market
and act as ECN broker.
However, if the trader has been losing, then they’d act as Market Makers for that trader.
Why this is so clever? Because what they’ve actually achieved is the ability to make money from
both sides. If a trader’s losing money then they make profit from his losses but if a trader’s
being successful then they don’t lose from his profits.
It’s the perfect example of “Heads I win, tails I don’t lose”
DMA - Direct Market Access - Brokers
DMA brokers provide their clients with direct access to their price data providers. That means
no re-quotes, no order rejections and no bad fills.
In this respect, they’re actually very similar to ECN brokers and STP brokers. In fact, all ECN
brokers offer DMA trading, but not all STP brokers provide the option.
Okay, we know that was a lot to take in and may have been a little confusing, but it’s important
that you know it so that you understand how your broker (or prospective broker) operates.
Now, how to choose the best broker and avoid the scammers and bad brokers? That’s what
we’re going to cover with you in the next chapters.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 33
HOW TO CHOOSE THE BEST BROKER
You have your trading system/software, your investment capital is ready, your short term and
long term plans are well considered… It’s time to choose a broker and start making some
money.
Well, not so fast!
Choosing a broker isn’t an easy task. It’s not rocket science but still, you shouldn’t under-
estimate it or you may “pay” for your mistake sooner than you think.
We all want the “best” for ourselves - especially when we’re talking about investing in a
business like Forex trading… but it’s not only about the money; we’re investing time, effort,
emotions and energy as well.
The best broker is always the one that works best for you in terms of your own needs and your
own trading plans. However, the way you plan to trade may provide you with a short-cut to the
answer / broker that you’re looking for.
For example: if you’re using a daily trading strategy and planning to trade with a small account
then you may wish to start trading with a market maker, because they’re fine with medium
term and long term strategies and good for small account sizes. You may also want to consider
a broker that provides a cash bonus!
Another example: if you’re going to use an auto-trading robot then you need to be sure that
the broker offers a trading platform able to support it. Most trading robots use the MetaTrader
4 platform but double-check the requirements for the specific robot you intend to use.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 34
The point here is that there’s no need to feel lost, or to take a long time wondering where to
start.
In theory, you have to think about all the relevant details (your requirements) and check off
everything on your list to arrive at a good (maybe even the best) broker for you.
Practically, however, there are many factors that may limit your choices right from the outset
and save you a lot of research time and effort.
Therefore, the first step is to know exactly what your own requirements are.
You can almost know that just from the trading system/strategy or trading software you’re
planning to use. And you can refine things further by considering the size of your intended
investment in the market, as well as your own personal preferences.
Trading is a personal business, and not everything is determined by numbers and lines and
indicators. For example, if you prefer long-term trading, then you can use a market maker but if
you prefer scalping or short-term trading then ECN or STP brokers would be your best choice.
The next step is to search for brokers that potentially meet your needs, make a list of the ones
you find, then visit their websites and remove those who don’t match after closer inspection.
For example, you may find a broker that support MT4 but needs high minimum deposit, more
than what you’re planning to start with. At this point you would delete this broker from your
list and move on to the next one.
Eventually, you’ll have a shorter list containing just brokers matching your needs so then you’ll
need to work through that list and start investigating!
Search online for review websites, forums, blogs, etc. and try to come up with an overall rating
for each broker. Just remember to be on the lookout for fake/paid reviews and affiliate
websites and blogs.
Marketing is part of the game, and against common belief, we wouldn’t feel bad or count it as a
negative point if we found a broker that’s heavily marketed. That’s how they get their business
noticed online.
However, whilst the broker itself may invest in honest or clean marketing campaigns, smaller
affiliates – usually looking for quick buck – would try to use fake reviews to get sign-ups under
their affiliate IDs and, today, it’s very common to see those fake websites and blogs, designed
to look like real websites with real reviews – especially the ones built using WordPress because
it’s so easy to get specially-coded plug-ins for it that create fake content. This attracts search
engine spiders and builds links to raise ranking in the search engines which, in turn, deliver
more traffic, potential prospects, etc.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 35
The point here is that you should keep your eyes open and not simply follow the first
recommendation you find online for any broker. Keep searching and researching – allow
multiple sources to confirm each other before you make any decisions.
Here are some factors that may help…
1. Join a regulated broker
Regulated brokers are ones registered and operating under the appropriate authorities in their
countries. These authorities take many forms, but mainly they work as special agencies and
institutions but there’s no worldwide agency so you’ll need to find out where the broker’s
located, which agency or institution is responsible for regulating Forex brokers in that country,
and then make sure that the broker actually is registered and regulated by the relevant agency.
Bear in mind, however, that countries like Finland have extremely strict business laws which are
considered more than adequate for policing financial companies and, since their financial
institutions are regularly accredited with the highest awards, the system does appear to work
particularly well.
2. Join brokers with low spreads
Low spreads can be offered by Market Makers, ECN brokers and STP brokers as well, so we
aren’t advocating a particular broker type here – just look for one offering low spreads on
majority of currency pairs they offer or, at least, on the majority of pairs that you intend to
trade.
3. Join a broker that provides more than just currency trading
If a broker offers only Forex trading, there’s nothing actually wrong with that, but it’s better if
the broker also provides the ability to trade other markets as well, such as Stocks, Indices,
Commodities, etc. because that means the broker’s covering a larger market and, therefore,
operating a bigger business.
4. Always start with minimum deposits
Beyond demo trading, you should always start by opening a small account first, with the
minimum required deposit. For example, if the minimum amount required to open an account
with the broker is $250, then that’s what you should start with.
Never start by live trading – always demo trade first, and never start by using your full
investments or all your trading capital. Especially if you’re new to the broker or never worked
with this kind of brokers before.
5. Don’t put all your eggs in one basket
When you’re starting out, it’s best that you begin by looking for multiple brokers, not just one.
Try to find at least 2 brokers - 3 would be great, 4 would be excellent.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 36
Next, spread your investment between them and test things out because you’ll often discover
that one (or more) of them isn’t exactly what you expected. If that’s the case, pull your deposit
back from that broker and continue with your evaluation.
6. Best platform
You need a stable platform with good operational speed, no technical issues, no chart freezes,
and nothing else that could affect your trading process negatively. If you’re a beginner then you
may want to look for a broker offering a more basic platform and avoid the more complicated
platforms until you’ve become more comfortable with trading in general.
Just remember that the platform should be fully equipped with everything required for your
strategy to work successfully. For example, if you’re planning to use a robot (auto-trading
software) then you almost certainly need either MetaTrader 4 or MetaTrader 5 platform.
7. Clear info and helpful support
When you’re dealing with a broker, you should only deal with respected and professional firms.
Any unprofessional signs are red flags that you should take seriously. For example, if a company
is not providing detailed information about itself then that’s a bad sign. A knowledgeable
support team is also an important, though usually overlooked, aspect that you must test as
well, so contact them and ask any questions you may have. Next, evaluate how they answered
you – did it look like a lesson in “copy/paste” with no real details, or did the person answering
you really seem to know what they were talking about? Even if you only have a demo account
but experience something strange or a technical issue, contact support and request an
explanation. Any excuse to check out the service being offered is worth taking.
8. Any Extra Fees?
When you’re choosing a broker, it’s important that you know exactly what you’re going to pay,
not just what you’ll be paying for. Read the broker’s contract agreement very carefully and ask
their support clearly if there are any fees or charges beyond any published spreads and/or
standard trade commission. Some brokers may charge special commissions or fees if your
monthly trading volume is below a specified level. Others may offer fee discounts or advertise
bonuses (such as a free VPS) if trade volume exceeds a particular threshold or if you deposit
more than a certain amount… just remember that what is given for meeting some criterion can
just as easily be taken away for failing to meet that criterion at a later date.
9. How margin and leverage are calculated?
Some brokers may opt to use different margin and leverage calculations depending on the type
of account and/or the financial instrument being traded. For example, a broker offering Forex
and stocks and commodities will almost certainly use a different calculation for each type of
instrument. With that in mind, be sure to understand how margin and leverage are assessed by
your broker because they’re an important factor in trading. Needless to say, if the broker is
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 37
outside of the US then they should be providing multiple leverage choices. For example, 1:100,
1:200, 1:300, etc.
Remember that the points mentioned above are for guidance only - you must do your own
research, perform your own investigations and draw your own conclusions before opening an
account with any broker.
Once you’ve settled on a broker (or, brokers), the next most important thing you need is a
trading plan.
There are essentially three parts of a successful trading plan:
A) Long-term goals
These are your major goals / targets – the main things that you’d like to achieve from
investing in Forex market and should cover the next 6 months to 1 year. For example,
making 50% / 100% / 200% return on your investment. Truthfully, you can set any goal
you wish – just stick to realistic goals that don’t put you under unnecessary pressure. If
your goals are unrealistic / unachievable then you’ll just get disappointed with your
apparent lack of “results”, trade with a negative mentality and react more emotionally -
all things likely to guarantee your failure over the long run.
B) Short-term goals
Once you’ve got a long-term goal, you need to set a series of short-term goals that make
achieving that long-term goal possible. For example, if your long-term goal was to make
100% return on your investment in the first year, that’s a great goal but so far-reaching
that you’re going to feel “lost” - that’s why you need short-term goals to lead you
towards your ultimate target. Let’s break things down a little:
Assume you open a $1,000 trading account and your goal, as mentioned earlier, is to
generate a 100% annual return.
A good short-term goal would be to look in terms of weeks… if you trade for 50 weeks of
the year then you’d need to grow your account by just 2% per week … that’s just $20
per week.
If you traded a conservative strategy (something with a risk-reward ratio of 1:1 or
better) then you’d only need to net an average about one winning 0.1 lot trade per
week to achieve your goal. Not just that, at the end of each week, you’d know exactly
whether you’d kept on track and where you were in terms of achieving your long-term
goal.
Sadly, most beginners fail to focus on their short-term objectives because they never
take a moment to work out what they are. Consequently, they keep their focus on their
long-term goal but have no real idea how they’re ever going to get there… so they very
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 38
rarely do, because they can’t tell if they’re actually making any progress.
One other point regarding the example above, if you’d reached your weekly goal by say
Wednesday, that would be a great time to stop trading for the week – so many traders
feel that they have to “keep going” in an effort to get ahead of schedule, but the most
common result is that they end up giving back the profits they made and actually find
themselves even further behind.
C) Management and Discipline
Money management and account management are the keys to success in Forex trading.
Without them, you won’t be able to direct yourself in the market and you’ll be out of
focus. Your trading – even with the best system in the world – will eventually lead to
failure. You need to understand and practice money management so that you can
manage your account wisely.
Discipline means that you commit yourself to your goals - plan your trades and trade
your plan. No guess work, no emotional trading, no contradicting decisions, no greed
and no fear.
Let us show you what we mean with a real-life example…
It’s very common to find many trading opportunities each day. Maybe 4 or 5 pairs are all
generating positive trading signals so you open the trades, set your stops and targets and then
wait for your profits. Unfortunately, one or two trades remain negative for too long and then
start moving against you. What would you do?
“Holding and praying” is very common in this situation (which can make Forex trading a very
religious experience for you!) but isn’t going to help much in terms of achieving your trading
goals. Professional traders, however, understand that the right approach is usually to close the
losing trade(s) and move on as though nothing has happened.
Never keep a losing trade open more than you should, and never keep adding to a losing trade
in the hope that the market will reverse and make up all your losses.
Of course, we all understand the psychological issues that come with taking losses – frequently,
you’ll close a trade at a loss (or the stoploss level will be hit) and, within a few more pips, price
will move right back in your direction – usually to a point where the trade could have easily
been closed at a small profit.
It’s almost like the market knows your inner-most thoughts / emotions and is “testing you”
each time!
The danger is that you start thinking “I think I’ll just move the stoploss back a bit further…” and
“a bit further” occurs a few times or, maybe you even remove the stoploss altogether!
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 39
That’s usually the point when you discover that the market wasn’t just “testing you” you but
was absolutely “out to get you” – what could have been a 20 / 30 / 40 pip losing trade is now a
200 pip floating loss and you have no idea what to do about it!
That’s why trading software (assuming the strategy’s reasonably sound) isn’t actually such a
bad idea. Software that can assist / guide you in your trading decisions, or even take over the
entire trading process for you, removes the guess work and a large portion of the emotional
stress and human errors that can creep into trading.
We’re not saying that you should use such tools exclusively – there’s nothing more important
than gaining trading experience, especially if your goal is to become a professional trader. At
the same time, however, the right trading software has the ability to make your life a lot easier,
if not better.
Ultimately, remember that trading is a business, and just looking for the right business partner
isn’t the whole story. You still need to have your own plans, tools, and a clear picture of what
you want to achieve from every step that you take - this way, you know exactly what you’re
doing and why – you’re not driving blind into unknown territory and adding unnecessary risk to
your business.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 40
HOW TO AVOID SCAM / BAD BROKERS
Okay… time to be open and honest: we don’t live in a perfect world!
Brokers are companies, and companies are operated and managed by people.
Those people generally know what they’re after in life but, some may not be too bothered
about achieving it honestly.
There’s currently huge demand for Forex and, unfortunately, once there’s huge demand for
anything, scammers and thieves are attracted to it like moths to a bright light.
The first thing that you should do to protect yourself from scam brokers is to gain a good
understanding of how brokers work, how they make money, and the different types of brokers
out there. In other words, educate yourself – if you know your friend then it’s much easier to
recognize your enemy.
The first thing that any scammer tries to target is the ignorance of his victim, because that
ignorance makes it easier to manipulate them into accepting lies as the truth.
For example, if a broker is promising you that, by trading Forex with them, you could turn $50
to $500,000 within few weeks by presenting some fake / unrealistic / fictional reasons then, as
an educated and well informed trader, you’d instantly understand that the broker was a scam
operation without any need to perform further investigations.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 41
When you fully and completely understand how the Forex market works, what to expect from
trading, and how brokers operate, it becomes very hard for anyone to scam you - by using
misleading headlines and false promises, at least.
Using catchy headlines and success stories is common practice when marketing any business
but, as long as what’s being presented isn’t misleading or over-hyped, there’s no issue – you
just have to learn the difference.
Remember, too, that honest marketing campaigns never include things like fake reviews or
testimonials so, if you spot anything suspicious, then that should be a huge red flag regarding
any broker using these tactics.
Having said that, in the same way as you shouldn’t judge a book by its cover, please don’t judge
a broker by its affiliate! The vast majority of brokers rely heavily on affiliates to bring them new
clients. Affiliates are required to follow fairly strict guidelines (or risk having their affiliate status
revoked and forfeiting any monies owed) but some affiliates prefer to take a risk and stoop to
using bad marketing techniques without the permission or knowledge of the broker itself.
Rather than play by the rules, they resort to posting fake testimonials in forums and blogs,
sending unrealistic claims via unsolicited emails (SPAM), etc., on the basis that their tactics are
designed to bring in larger numbers of clients (mostly the “ignorant” ones) quickly and they try
to get paid by the brokerage before anyone complains. Of course, they invariably get their
affiliate status revoked but, by that time, they’ve made a lot of money and simply turn their
attentions to a new broker and repeat the process.
So, as you can see, you need to be careful before you judge the broker itself.
If you discover any instances of underhanded marketing practices yourself, contact the broker
directly and see how they respond. If nothing gets done about it then they may secretly
“approve” and aren’t worth dealing with – just take into account that things may take a little
while to happen as the legal department of a reputable brokerage will need to investigate,
contact the affiliate for an explanation and/or bypass the affiliate and attempt to resolve the
issue directly and all of this can take time.
2nd point: What’s presented to you by the broker – in emails and/or on their official website, for
example – is hardly expected to show them in a negative light. Again, that’s fine and expected,
and you should take onboard anything claims they make that can be substantiated – the key
here, as always, is proof.
However, always check reputable websites for reviews and details of people’s own experiences
before you join any broker as this can help steer you clear of potential problems. Just keep in
mind that most beginners lose money, and at least 90% of them lose all of the capital their first
account(s), so when you hear or read complaints from traders on review sites and forums,
remember that many “complaints” are probably not really valid, just frustrated newbie traders
trying to pass the blame for their own mistakes.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 42
That’s what separates beginners from pros - beginners always – always – blame someone else
for their mistakes… especially their first ones!
You’ll hear / read things like, “they’re hunting my stops”, “the platform didn’t work when I
wanted to…”, “they’re holding my money for no reason”, etc.
What you should be looking for are reviews and experiences based on unbiased opinions,
emotionless facts, and proven results.
3rd point: Test things yourself… unless, of course, all of your research and investigation suggests
the same thing but, if you encounter mixed reviews and opinions, then the only thing that
counts is your own experience. But, before spending time testing things yourself, you need first
to find enough information that suggests (assuming that everything else is right) that this
broker would be a good broker to work with.
So how should you begin? Initially, open a demo account. Any broker that doesn’t provide the
option of opening a demo account isn’t even worth your time - not because there’s no chance
them being a good company, but because they failed to prove it.
Most brokers allow actively traded demo accounts to remain open for as long as you want
them. Other brokers, however, limit the lifespan of their demo accounts time to specific periods
- 30 days is quite common in these cases. If you find yourself demo-testing a broker and your
account expires, simply open another account and continue testing for as long as you need – at
worst, you’ll just need to provide a different email, that’s all.
When you’re requesting a demo account, try not to provide full contact details initially (if at all
possible). Your real name and email address should be enough - for everything else, just enter
“Not disclosed” or “N/A”. Even with the email address, try not to use your main personal or
business email – use a free account from Google, Yahoo, etc. instead if you can.
The reason for using incomplete address details, a “throwaway” email address and, of course,
no phone number, is to prevent the broker from using that information to market their services
and bonus offers to you in an attempt to attract you as a customer. This can become very
annoying and limiting how the broker can contact you is a simple way of avoiding too much
“personal attention” in that respect.
Note: Some brokers now routinely close demo accounts submitted with incomplete details
after 24 hours so be aware of that possibility – if it happens to you, simply request a new
account and provide more real information if the broker’s still of interest.
So, simply provide the minimum amount of personal information possible, register for a demo
account and get testing. If you really want to do some detailed research then throw caution to
the wind, submit your real details in all fields, keep in contact with the broker’s representatives
and ask them anything you want. Just be aware that those representatives are not the support
guys that you’d be dealing with later.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 43
Also note that most brokers provide “best case” spreads and transaction processing on their
demo platforms which are only typical of their “premier” accounts so don’t judge your potential
success by the results of your demo account testing, simply us it to evaluate their platform i.e.
that it allows your proposed strategy to work correctly, and to test their support and overall
service level.
4th step: This may be the most important step of all… the point where you open a minimum-
deposit, real money account!
If all of your research has led you to conclude that it’s a good broker (in theory!), now’s the
time to prove it. Trading with real money is the real deal. Be prepared for anything and
everything. This step could support everything else, or simply provide a totally opposite
experience. Why not start with this step? Because you should eliminate all other factors first, so
you know that, whatever happens, is not the platform’s fault or market conditions or a result of
anything except the broker’s behavior.
How to start?... with the smallest possible deposit that the broker permits yet still allows you to
trade your strategy. If the minimum deposit allowed is $50 and you can still trade your system
with that, open a $50 account and forget about any bonuses or extra services that the broker
may offer you to deposit a larger amount of money.
What if there are no minimum deposit limits? Then simply deposit whatever you feel
comfortable with. Remember that this is a “testing” account, and this money could be lost at
the end of the testing period!
After that, all you need to do is to start trading the same way that you would if were trading
with your main investment amount. Use the same strategy that you’re planning to use, trade at
the times that you’re planning to trade, use proportional trade sizes, etc.
The important thing is to forget that it’s just a testing account and treat it the same way you
would treat your main trading account.
At this point, you’ll probably experience one of two things:
a) Your research is confirmed and the broker proves to be a good broker, or
b) The broker behaves differently now they have your money and you start facing some
potentially serious issues with them, in which case try to get out with as much of your
deposit as possible if those issues can’t be resolved… before it’s too late.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 44
5 SIGNS OF A “CHEATING” BROKER
Before we talk about “cheating” brokers, you should be aware of the contract that governs the
relationship between you and your broker. That’s why you must read and understand the
agreement before you click on “I agree” or sign any papers.
The contract agreement between you and your broker is the most important factor protecting
you against any manipulation that may occur in the future. Not the advertised info on their
website, not the reviews that you find in forums, and not what their support or representatives
tell you. When it comes down to the wire, only this contract can confirm who’s right and who’s
wrong when issues have occurred so, if you don’t understand what the contract is saying, send
it to someone able to explain the legal “jargon” to you in simple language.
Also, before you sign anything, be aware of the steps you’ll be required to take to protect
yourself – especially the legal jurisdiction that you must accept. That’s why it’s very important
to work with a regulated broker whenever possible - even better if the broker operates in the
same country as you.
Don’t get me wrong – there’s nothing wrong in dealing with online brokers located overseas,
it’s just a better situation if they, at least, have an office in your city or country, or they have a
local representative that you can contact face-to-face, should the need arise.
In the event that something does happen, you must be clear, direct and completely
professional with your broker about. Don’t over-react of become aggressive, just let them know
that you have good understanding of the problem, that you know your rights, and that you can
protect yourself legally against any action.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 45
SIGN 1: “TECHNICAL ISSUES” WITH THEIR PLATFORM
Your trading platform may not be the first (or only) thing or the first thing that you have to deal
with when you work with a broker but, without doubt, it’s one of the first things that should
alert you to manipulation that may be taking place.
If your broker’s cheating, expect to see unusually high numbers of “technical” problems with
the platform - especially ones affecting your order placement… things like an unstable server
connection with servers, order rejections, requites, platform freezes, etc.
We’re not talking about real technical problems with the platform itself - normal technical
issues will occur from time to time and are acceptable within reasonable limits – there are just
too many things between your trading platform and your broker that can (and will) occasionally
go wrong to expect 100% “uptime”.
What we’re actually talking about here is deliberate broker manipulation that pits your trading
platform against you and is then passed off as a “technical issue” to cover it up.
How can you know if what you’re experiencing is a real technical problem or some kind of
manipulation by your broker?
Simple – first of all, you already tested the platform itself on a demo account so you know how
it works and what to expect from it. That’s one of the main reasons why you should always start
with demo trading, then a small real-money account.
Second, if the majority of the issues you experience are centered around on your orders,
targets, stops and any associated aspects of your direct trading activity, yet few to no problems
occur with other of the software then you should at least become suspicious and start to
investigate / request an explanation from your broker.
SIGN 2: FAKE OR UNREALISTIC BONUSES AND/OR UNCLEAR FEES AND HIDDEN CHARGES
We all know that brokers are in business to make money. It’s a business, like any other, and
we’re their customers - there’s absolutely nothing wrong with that! What absolutely is wrong,
however, is the use of fake or unrealistic bonuses to attract new traders, who then discover
that they either don’t qualify for the bonus they expected or that hidden charges and extra fees
apply – sometimes both! That’s why we made the point of insisting that you read your contract
very carefully, because it allows you to see the truth and explains the reality behind the
promises and headlines used to get your initial attention.
For example, some brokers offer a credit bonus (either a percentage of your deposits or a fixed
monetary amount) when you make your first deposit. However, when you try to withdraw your
account balance after trading for a while, they won’t allow you to withdraw all of it because
“you can’t withdraw the bonus - you can only trade with it”. Another example is the offer of a
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 46
free service that you’d usually have to pay for elsewhere - a free VPS, a subscription to a signals
service, or even particular trading software. After you join them, however, you find that they
charged you for these services because your account wasn’t big enough to qualify, or because
you didn’t trade enough during the month.
Again, it’s okay to have specific qualification requirements for extra services and bonuses that
the brokers may wish to offer clients. What’s not okay is when the qualification terms aren’t
clearly stated and the misleading information is used to attract new clients.
SIGN 3: SLOW / UNHELPFUL SUPPORT
We’re not talking about generally slow and unhelpful support staff here, because that wouldn’t
be enough to suggest that your broker is cheating. What we’re actually talking about is
generally helpful support teams that suddenly become unhelpful, slow or unresponsive when
you have serious problems with your orders.
The plan here is to try and wear you down to the point that you start to believe and accept
whatever reasons the broker puts forward in an attempt to cover their manipulation of price
and/or order fills.
SIGN 4: HIDING THE COMPANY’S DETAILS
What we mean here is that less scrupulous broker often provide incomplete (if not totally
incorrect) information regarding their company. Examples include hiding / misreporting where
they’re located, their physical address, telephone numbers, the names of their senior
managers, etc.
You have the right to know the details of a company that you’re planning to (or already) do
business with.
SIGN 5: LYING ABOUT OR HIDING THEIR BUSINESS MODEL
When a Market Maker pretends to be a “no dealing desk” broker, that’s always a bad sign! To
be able to work with a broker effectively, you need to know how they operate.
Remember that there are no demons or angels - brokers all have good and bad sides, so it’s just
down to you to determine which broker might be better for you and which broker might be a
bad choice. To do that, however, it’s important that you completely understand what kind of
broker you’re working with, because each type requires a different approach in term of account
size, kind of strategy, etc.
Any broker that tries to hide something like that is going to try to hide other material facts
which should be enough of a red flag to make you start looking elsewhere without a full
explanation.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 47
The signs mentioned above are just examples to help you on your quest – you’ll likely uncover
many different signs as you gain more experience and start to deal with different kinds of
broker.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 48
HOW TO FORCE YOUR BROKER TO HELP YOU MAKE MONEY
As we said in the beginning of this report, your broker can either be your best business partner
or, your worst enemy and, by now, you know how to choose a broker and how to confirm
whether your current broker is “cheating” or not. In fact, you’re know many, many times more
knowledgeable regarding brokers and how to go about selecting one than 99% of traders!
Now let’s see how you can force your broker to help you make money, instead of working
against you and making you lose money.
First, you need to understand which kind of broker you’re working with. This’ll help you decide
the best trading strategy to use with them. Allow me to explain…
Market Makers are great for intraday trading, swing trading and long term trading using small
accounts. Many Market Makers resist scalping systems or specifically forbid them. We know
that pure Market Makers are retail brokers, meaning they make money from your trades in two
ways: from the spreads that they add to the original market spreads and, if viable, by trading
against you to profit from your losses.
Unless the broker manipulates price movement itself and creates different market conditions,
then there is no problem in any of that. All that you need to do is use a solid, tested and
profitable strategy that really works over the medium and long-term whilst avoiding scalping
and scalping-like strategies. This applies even if you’re using auto-trading software.
With ECN brokers, things are little different. ECN brokers are great for scalping and short-term
trading, as well as medium to long-term trading. The only thing to really avoid with ECN brokers
is trading during news releases or important economical/political events. That’s because ECN
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 49
brokers leave you totally open to the market and spreads could suddenly go sky-high for any
reason, so you need to pick and choose your trading times quite carefully.
If you use the wrong strategy or trading system with a broker then you’ll almost certainly get
bad results because you’d be forcing the broker to work against you.
The most obvious example of this (which you can test yourself if you wish) is to use a good
scalping system or strategy with a Market Maker/retail broker. You can be 100% sure that the
broker will be alerted and will trade against you, making sure that you continue to lose until
you simply stop using trading that way.
Never hold too much money in your account. One of the reasons why you should test things
out with your broker by opening a small, real-money account, is to see for yourself how
hard/easy it is to deposit and withdraw money. Once that’s been established, you can later
repeat the same process with larger account sizes.
Why shouldn’t you keep too much money in your account? Well, mainly because your broker
isn’t a bank!... it’s an investing company. Yes, it’s a financial firm, and should be regulated and
tested but, let’s be honest, nothing’s guaranteed in this world and change could happen
anytime, so why accept the risk?
Simply trade and withdraw your profits regularly until you’ve withdrawn an amount equal to
your deposits. At that point, you’d be trading entirely from profits and your money – the
amounts that you deposited – is safely back in your pocket.
After that, you can keep whatever you like in the account and trade with it until you’re satisfied
with the results and ready to withdraw more money.
Share your experiences with other traders. If you believe that you’re trading with a good
broker, why not share your experiences with other traders and help the trading community –
you can even make some extra money by referring other traders to your broker via your own
affiliate link.
Just ensure you state clearly that it’s an affiliate link but your main goal isn’t to get commissions
(though you’d appreciate the chance), you’re just looking to point other traders towards a
broker where you’ve had good experiences.
The reason for being upfront is to avoid losing your focus on trading and just promoting brokers
and trading tools / products. It’s also to avoid you being labeled a spammer or marketer by
other traders. While there’s nothing wrong with marketing or being a marketer, the fact is that
you’re not a marketer - you’re a trader trying to help others, that’s all.
If you want to try referring potential clients to your broker then be aware that most (if not all)
reputable forums have banned commercial promotions within forum posts. The only generally
acceptable option (other than paying the forum owners to display banners for you – not a good
idea!), is to create a simple, free blog with some helpful trading material and to include a link to
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 50
that in your forum “signature” – that way, whenever you post in the forum, others will see your
signature and some will visit your blog. Again, remember that your main goal here isn’t to focus
on promoting the broker, but to offer genuine help and to share your thoughts, ideas and
experience - making some money from that’s a nice bonus, but don’t expect to retire on the
proceeds!
Use your broker’s bonuses and free services. Many brokers today offer different kinds of
bonuses and valuable services free. If you have a chance, use them, and allow your broker to
help you with what you need. After all, you’re paying for that through your trading activities
and your broker wants to keep you an active and successful client.
The most important thing to keep in mind is that the best way of forcing your broker to help
you make money is actually to use a trading strategy, system or software that makes money!
Of course, as mentioned earlier, you have to make sure that your trading strategy is suited for
use with your broker - if it is, then all that you need to do is use it and make money from it.
If, however, you noticed that your broker’s “playing dirty” then you should be prepared to
protect yourself and your investment.
If your broker genuinely seems to be manipulating things and can’t offer a credible explanation
then be active on forums and reviews websites, and let your broker know that your vote
counts. At the same time, be honest with yourself and don’t just start attacking the broker
everywhere just because you’re losing money. Doing that ends up hurting no-one but yourself
and your own reputation.
Finally, if you’re going to post anything online regarding your experience with your broker (be it
positive or negative), be ready to provide some kind of proof to add credibility to whatever
you’re saying. People these days are particularly suspicious… if you post a positive review or
story, you could quickly be accused of doing so just to promote the broker whereas, if you post
something negative, you could find yourself accused of lying or promoting other brokers! This
can quickly turn into a lose-lose situation so always be ready to provide proof of what you’re
talking about - even some screen shots can be useful.
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 51
FINAL WORDS…
If you’re trading the Forex market (especially manually), try to focus on one or two pairs at
most. The same if you’re trading stocks, commodities or indices. Diversity is recommended in
any business but, at the same time, focusing on a few opportunities at a time is also a good
strategy.
When you focus on trading one currency pair at a time, that doesn’t mean you won’t analyze all
of the others. All markets are connected and related so any large move in one economy affects
many others as well - the debt crisis in the US market affected the European market, and the
current financial problems in the European market are affecting the US market.
If you focus on trading EUR/USD and USD/CAD for example, that doesn’t mean you shouldn’t
be aware of what’s happening in the Asian market and analyze the JPY pairs - it only means that
when you start trading and placing orders, you should try to pick the most profitable and stable
pairs.
Remember, also, that some trading systems are specially designed for specific pairs or markets
and most are designed to perform best under specific market conditions.
Probably the best reason for restricting your trading to just one or two currency pairs at a time
is that it allows you to have more money management control and less emotional stress.
Try managing 10 - 15 open trades on a live account for few days and you’ll understand exactly
what we mean!... Trading with real money is very different to trading demo accounts. We can
simply open as many trades as we want on a demo account – after all, what’s the worst that
could happen? Even if we lost all the “money” in that account, with just a few clicks we can
simply open a new one with more virtual money and be back in business!
However, if you’re trading with real money then you have a limited account size – even if you’re
trading with $100,000, it’s still limited, and you need good money management to keep things
under control.
If you want to move from one place in the city to another, you may find 10 different roads that
could take you there, but in the end, you have to choose just one.
It’s the same with trading… your goal is profits, and there are tons of currency pairs and stocks
you can trade. Trading all of them is just impossible, and simply trading too many of them puts
your account at great risk so just pick the best one and stay with it until you reach your goals.
For example, if you’re trading the Forex market then trade multiple pairs with your system on a
demo account and only trade with real money when you notice one or two pairs with
consistently better results than the others (start with the major pairs first).
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 52
The next step is to choose the best broker for you. In this report, we’ve tried to explain
everything important about Forex brokers. We know that there’s a lot more to the subject but
we’re limited in in terms of time and space so we hope you enjoyed this report and we’ll try to
continue exploring this subject in a future report so you can get the best results possible.
To your success,
The Forex Megadroid Team
The Forex Megadroid Team | REVEALED: Top 10 Secrets Of Selecting A Forex Broker 53
DISCLAIMER
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has
large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them
in order to invest in the futures and options markets. Do not trade with money that you cannot afford to lose. This
is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any
account will or is likely to achieve profits or losses similar to those discussed in this report and past performance of
any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN
ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE
TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT,
IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN
GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO
REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR
TO THOSE DISCUSSED.
No representation is being made that any account will or is likely to achieve profits or losses similar to those
discussed. In fact, there are frequently sharp differences between hypothetical performance results and the actual
results subsequently achieved by any particular trading program. Hypothetical trading does not involve financial
risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading.