Below are what qualities I look for in a Forex broker. These are not in any particular order:
• Check their spread against other brokers. It goes without saying a lower spread is better because it costs you less to trade (all other factors being equal).
• Are they regulated? Is this broker registered with any regulating authorities? Check to see if your broker of choice is registered with the National Futures Association (NFA) if they’re based in the US. If the broker is based in the UK, check with the Financial Service Authority (FSA). If the broker isn’t registered with any of these or any other recognized regulating firm, then you may want to think twice before signing up with them.
• What is the minimum lot size, and do that allow fractional lots to be traded? Believe it or not a lot of brokers won’t let you trade under 1 lot, and many won’t let you trade hundredths of a lot, only tenths. Stay away from these guys! You need complete control of your money management, and if you want to trade, for example, 1.34 lots you should be able to do it!
• How easy to use is their trading platform? This is where you place trades, change trades, check account balances, get reports and get in and out of positions. You need to be able to do this quickly and accurately so a user–friendly trading platform is important. In my opinion one-click execution is also useful especially for scalping.
• How good is their customer service? Can you place and exit trades over the phone (what if your electricity is out and you need to exit a trade on your cell phone)? How quickly do they respond to emails? How sympathetic are they to complaints? What hours are they open?
• How quickly do they process withdrawals out of your account and do they charge you for this service?
The above is a pretty comprehensive list of what to look for in a broker. For what it’s worth, the broker I like best is Oanda because of their very low spreads (0.8 EUR/USD and 1.8 GBP/USD) and reliability.