When it's time to open a trading account, novice traders always cruise the online forums asking the same question, "Who's the best broker?"
Well, the fact is, there is no way to answer that question in a manner that is optimal for all traders. Brokers come in all shapes and sizes and sometimes it takes a little while to find the "right"
one for you.
I have accounts with several brokers and the only thing that they have in common is that they alluse MetaTrader 4 as a platform. I have a self-imposed
ceiling that limits the amount of money I entrust to any broker so, when an account reaches my predefined limit, I open an additional
account with another broker. I am always interviewing potential brokers so I have developed criteria that my candidate brokers must meet before I give them my hard-earned money. Nobody expects the Spanish Inquisition -- expecially brokers -- but if they don't want to answer any tough questions then I look elsewhere for a broker who will. Believe me, there are tons of them out there.
I don't believe in rankings to find the right
broker. Visit any number of websites that rank online brokers and you will find that none of them agree on the top ten. Forget about the top 150. So, over the years, I have developed my own system to help me identify the right broker for the style of trading that I plan to use. I trade my self-directed IRA, for example, with a broker who allows me to tax their mini-account server with hundreds of auto-trades a day. Most brokers wouldn't trade-off precious bandwidth for the pennies they're making on the spread from those trades, but this one doesn't mind. I also place longer-term EUR/USD position trades with another broker, and I day trade the 1-minute chart during the London session with yet another firm. I selected each of these brokers based on the trading style I wanted to use. No broker rankings that I can think of would have been helpful in making those selections.
In general, I look at two major areas when evaluating a broker: (1) Level of Maturity
and (2) Range of Services
(ROS). In determining a company's LOM I collect a range of data (some quantitative, some qualitative
) from a number of sources that identify and/or define attributes like age, trustworthiness, customer service, consumer confidence, and financial viability. Determining ROS is a little easier because I have a pretty exhaustive list of easily measurable
services, features, and offerings that a broker should provide if they are going to get my business. Within these two categories (LOM & ROS) I have defined 62 data points that make rating a broker an objective, statistical analysis exercise. It's a time consuming process, but my money is at stake so I take the time. It's called due diligence
Over the course of the next few weeks I'll be explaining pieces of my broker selection methodology here on Turtle Soup. We're working very hard at ForexTurtle
to automate the process and incorporate it into our DATAINSIGHT
facility. Our goal is to provide a more accurate, objective, and efficient web-based broker comparison tool. We think that ranking brokers from 1 to 10 will soon become obsolete. So stay tuned...