There are only three questions you need to ask when you’re looking for a forex broker:
- Are you going to give me excellent execution with low commissions and spreads?
- Are you going to send my money back within 24 hours?
- Are you likely to go bankrupt in the near future?
If a broker ticks those boxes, then picking a broker is really just a commodity. I don’t need market analysis or the latest trendy tool. The only reason I’m trading forex is to make as much money as quickly as possible (and to keep it) .
Too many brokers have gone belly up. I put together this guide to help you make an informed decision about who to trust and who offers the best deals.
Shaun’s broker recommendations
Pepperstone is where I trade my live accounts, which says everything. My money is sitting at this broker right now. I’ve met Owen Kerr, the CEO, in person and have a friend in their Dallas office. I’m very comfortable with their banking relationships. They also offer extremely competitive pricing.
ILQ caters to large retail customers (people that trade 100mm in monthly volume or more) or CTAs and independent money managers. The upper echelon audience means they do those three important things right. ILQ has a solid reputation in the industy, and based on the endorsement of a colleague that trades with them, I’m comfortable recommending them to my readers.
MB Trading is a US firm that offers the only true ECN available to retail traders. When you post a limit order and it’s better than the best bid or offer, your price shows up in the terminal window. They also offer liquidity rebates, which I’m a big fan of. I’ve known Justin LeBlang for several years and held live account with MB Trading for two years. They’re support is best in class and the technology and pricing is excellent.
Are you concerned about broker shenanigans? Learn how to protect yourself against forex broker bankruptcies.
Have you an opinion or comment on FXCM please
Hey Ed,
Good to hear from you! I hope all is well in not-so-sunny Ireland.
If you asked me a few months ago, I would have said that there’s no reason to trade there. The fact that their spreads have come down makes them more reasonable again. FXCM runs hot and cold with offering good deals. They pop up every few years, then take them away as soon as they can get away with charging 3 pip spreads on EURUSD. I like my broker relationships to be more stable than that.
Hey Shaun Pepperstone doesn’t accept US clients. Was wondering how you trade there, and why they even have a Dallas office?
Hey CP,
The account is technically through a company I incorporated in Ireland. That gets around the US client restrictions.
They have a Dallas office because of the time zone differences. It’s a lot easier for staff to support a client in Melbourne in the middle of the night when it’s broad daylight in Dallas. Also, wages in Dallas are considerably cheaper than most of Australia.
is there a way for me/us to get around the same way? or do we have to own land in ireland or something? i love pepperstone it’s too bad im u.s. right now
Hi Justin,
The only legal alternative is to form a corporation in a non-US jurisdiction. I have a company in Ireland that I set up when I lived there, which is how I trade at Pepperstone (technically, my company does). You don’t need to live in a foreign country to set up a foreign company. The only real obstacle is that it costs a few extra thousand dollars every year to comply with US tax reporting requirements. I wouldn’t suggest setting up a foreign company specifically for trading unless it makes financial sense for you to do so. Legitimately deferred taxes or lower tax rates would be a good reason if your trading balance is large enough for those benefits to outweigh the extra costs and hassle.
–Shaun
I’ve noticed PepperStone has gaps on their 1minute chart.
I then see FXCM, ALPARRI, OANDA MT4 1Minute charts have the exact same candlesticks filled in normally without the gap.
I can’t find any other broker besides FOREX.COM and PepperStone that has that 1M gap data. And even then, some of their gaps are similar and some of their gaps are different. Why?
Is their an indicator that shows that the gap happened if I was forced to use FXCM (or a chart that made them invisible)?
Forex is an over the counter market. Everyone has a different mix of liquidity providers. Even if they have the same liquidity providers, they may have different feeds from that provider. There’s no central exchange – the price is what you make it. Trading on different liquidity is one of the strongest advantages to FX focused traders who really master the market plumbing.
Hi Shaun,
Thank you for the reply and for the series of interviews which I find are very helpful.
I have a disput going on with FXCM where my chart B and A prices do not match and are much wider than those showing in the Market Watch window!
If I am using a typical EA which price feed will it respond to?
How can there be different price feeds for the chart and market watch or is this a way for the broker to make more money?
Good to see you have ongoing value from your time in Ireland!
Thank you.
Ed
Hey Ed,
Clients see different price feeds based on their account size and trading behavior. There are all sorts of different price feeds based on your importance to the broker and what he wants to do with you. Some of the larger brokers will stream 10+ different quote streams to different clients. Hence, your charts may not match the live prices you received.
The reason for this is that, especially with accounts that are breakeven or worse, the broker runs a b-book. B-books take on risk against the client; the broker wins when you lose and vice versa. The best example of this at FXCM was when they introduced micro accounts a few years ago. The spreads on the micro accounts were about 1.5 pips on EURUSD, but the regular accounts had 2.7 pip spreads. Also, it’s not unreasonable to suspect that the pricing may have been shaded.
Every broker I recommended runs a straight a-book. They have one price feed and you trade exclusively on those prices. The charts should always match your trading prices. Let me know if you’re thinking about switching brokers.
Hi Shaun,
Do you have an opinion on Dukascopy?
I’m from Alberta, Canada and recently was a FXCM client until FXCM UK decided to adhere to Alberta Forex regulation which forbids Albertans to trade Forex unless your a Billionaire (aka ‘Accredited Investor’)
Cheers
Hey Jason,
I don’t have any personal experience with Dukascopy other than coding in JForex. They have a solid reputation and the fact that they’re a Swiss bank is a huge plus.
You can do better on pricing, though. Their spreads are great, but the commissions are high unless you’re doing serious volume. For example, I trade about 1 million EUR notional per month on EURUSD. On my volume at Dukascopy, I would pay 0.35 average spread + $35 per side per million, which is $35 + 2 * 35 = $105 per million round turn.
At Pepperstone, the average trade cost on my live account with spreads, slippage and commission has been 0.73 pips. If you put that back into USD per million, it’s $73 / 1.25 (currenct exchange rate) = $58.40.
Trading at Dukascopy would cost me an extra 80% on every trade. So, for my situation, Pepperstone is an enormously better deal.
Thanks for the detailed reply Shaun!
Can you say if an EA reacts to the chart price feed or to the MW one or can it be programmed to react to either?
I have told FXCM that I will close my account if they don’t fix it and have reported it to the UK regulators.
I have excellent spreads in the MW of MT4 which are averaging 0.2 on EURUSD and often =< 0 zero but it is really annoying to see those different prices on the chart and I cannot fully determine what price my EA is reacting to open or close the trade. observing visually it appears to be reacting to the chart prices.
Hi Shaun, What’s your opinion on Teletrade? (http://teletrade-dj.com/)
They have high spreads (EUR/USD 3pips) but fixed. They claim brokers that offer very low spreads don’t keep ’em constant, so fixed is what they recommend. I did a 4 week training there and formed some relationships but this is the 2nd time I’ll try after a not so “wise” agent I had there first time. Regarding Dark Pools review do you think they’re all untrustworthy?
Hi Dimitri,
There is no compelling argument for fix spreads. My average trade on EURUSD costs 0.73 pips, so why would I want to pay more than 4x as much for probably worse execution?
Regarding Dark Pools, I wouldn’t put my money at the brokers recommended above unless I had complete trust and confidence in them. My personal money is there.
I can’t find any other broker besides Pepperstone and FOREX.COM that has that 1M gap data. If you download metatrader 4 for FXCM oanda etc you won’t see the gaps only pepperstone and forex.com … why does this happen?
PepperStone and Forex.com have the same gaps and some are different why does this happen?
Is their an indicator that shows that the gap happened if I was forced to use FXCM (or a chart that made them invisible)?
Gaps are just high volume low liquidity situations correct? is there such thing has a high volume low liquidity indicator?
What is Catching Gaps EA? What do you suggest moving forward with this?
Gaps don’t necessarily imply volume. On an M1 chart, it’s usually associated with what you said: high volatility, low liquidity.
Gaps don’t necessarily plug in, especially on smaller time frames. They can actually be a solid momentum marker for up to 20 minutes.
Hi Shaun
I am new and using exness, i really need to know your opinion about it as a broker.
Thank you
Hi Imran,
Thanks for your message. I honestly haven’t heard of exness, so there’s not much that I can add. Where are they located?
–Shaun
HFT occurs in nanoseconds, whenever I see HFT firms uttering the word FX I’m perplexed – because they have to go through the Interbank, or the myriad of liquidity providers, they will always have to pay the interbank spread though right?
is there really nanosecond forex trading? -because they would have to pay 0.3 pips per nano second and go bankrupt in 2 seconds. Or is HFT FX considered like tick scalping ? ( or something that’s capable of being percieved with humansight etc. )
The only alternative that i can think of is if they worked out a deal with their broker paying 0.0 spread and a % of the profit made at the close of the trade- is that what happens here? Do you know the technicalities of FXHFT?
Yes, HFT truly exists in the FX market. The key point you’re missing is that HFT traders are price makers, not takers. They naturally earn the spread by letting traders take their prices.
Also, they’re not beholden to the banks. Most volume trades on the EBS and Reuters platforms, which are not exclusive to the banks.
How does a client know whether or not their trades are anonymous encrypted and not being viewed by their broker or liquidity providers? For example if someone spent 10 years on their EA- they wouldn’t want a bunch of kids at their broker staring at their trades live copying them. What measures do brokers enforce to give their clients security and peace of mind of knowing absolutely no one can mimic their trades? and does it really something that holds water or is it just lip service.
Hi Shaun,
I am a new in forex trading. I thank you for your free EA and tools.
I recently just registered and funding my account with ExcelMarkets.com . They are white label of Global Broker NZ Ltd. May I ask your opinion of that broker?
Hi Wilson,
I honestly don’t know anything about them, so I’d be hesitant to say anything good or bad.
I see that your not a fan of FXCM, I was with FXDD until just the last 6 months or so. I was around with REfCO fun and loss a large amount of money. My question is, which US brokers do you recommend. I’m not real happy with FXCM. Can you recommend a firm, what have you heard about Nadex?
I love MB Trading. They’re a great outfit and their spreads and commissions are very fair. I looked at Nadex for binary options. If I were going to trade them, that’s 100% who I’d use. We’ll be doing a binary options intro series within the next few weeks.
hi Shaun Overton my name is mohamed amine i’d like to know wich platform of trading is the best :
etx capital, e trade, e toro , ….
Hi Mohamed,
It really depends on your situation. I like MT4 for actual trading because it’s so easy to program strategies. I’m not doing anything sophisticated, so it’s pretty easy to accomplish. If I were a scalper, then I’d probably use cTrader. I don’t have experience with the platforms that you mentioned.
can i trust this software , it apears a little helpful
No. I removed the link from your post as it appears very sketchy.
hi shawn
how can i buy a stock on mt4 ?
is mt5 better than mt4 ?
how people can trade by their phone ?
what is the difference between eurusd and usdeur ?
thank you shawn overton , have a great day .
No MT4 broker that I know of supports share trading within MT4.
MT5 is basically MT4. There’s no substantive difference. MetaQuotes has moved almost all of the MT5 features down into MT4.
You would need to download the MT4 mobile app.
One is the inverse of the other. However, they display the same information.
Hi Mr.Overton How are you? i hope you will be fine i enjoed with you …… i was looking for a better brokers then i was trying to read some three brokers are FXPro , icmarkets and pepperstone too …. i love to use with ctrader and MT4 too ,, i tried to open an my new account with that brokers but i did not know which broker is kind of three brokers for me? why?
Hi Ahmed,
I recommend that you go with Pepperstone. They offer all cTrader and MT4 and I believe it’s the cheapest and safest place to put your money.
You’re Correct Sir, i will try to do it but i can ask you a question please if you never mind how many maximum lots size for metatrader 4 at Pepperstone?
The maximum is 100 lots, which is 10 million notional, per ticket. That can be increased on a per account basis.
Thanks for your help! its great to hear the truths about that broker from someone like yourself!
God bless you sir and Have a great day
hi Shaun,
as I don’t have much time to trade myself is there a managed mam account you would recommend?
I’m not accepting anyone into QB Pro as that window closed on Jan 30. I honestly don’t follow any other MAM accounts.
Shaun, are you still happy to recommend Pepperstone in light of the recent comments on FF regarding a “missing $14M”? Do you believe any of that to be true?
You’ll notice that I still have all of my money in my accounts. If I was worried about it, the money would be on its way home.
ASIC would’ve stepped in already if there really were missing funds.
Hi Shaun, Looking at opening a large account with MB. From the research I have done, it seems that there may be a problem with slippage on overnight positions? Have you encountered this? Also
do you think that their roll over costs are relatively expensive?
Thanks. Sam
Hi Sam,
I’m honestly not sure on either point. Most of my trading was with limit orders. On that front, I can say that I actually received a great deal of positive slippage. I haven’t looked at the rollover in eons.
Thanks for your reply, I have for the first time since opening a demo with MBT compared their spreads to my market maker broker (Oaanda) and in about 60% of cases they are considerable wider, even on the majors (except the euro). Today was president’s day, so not sure if this impacts the comparison. I called them but was none the wiser after speaking to a couple of people. I signed up for the commission based account so would expect the spreads to be tighter as commission is being paid. I can send a screen shot of both quote panels if you like.
Hi Shaun, I’ve been burned by my FX broker on the EURCHF on 1/15. A 0.98 long position was liquidated when they printed a 0.86 tick resulting in a negative account balance I had eventually to cover. It was my fault trading in that environment at all, but the negative account balance could have been avoided! Now I’m looking for a FX broker with negative account balance protection. All broker can liquidate your account before it goes into negative territory. To do that in a timely fashion is a risk the broker should bear not the client. So do you know FX brokers offering such a protection?
Hi Christian,
Yes, there are a few. That said, I think my free blowup insurance is more relevant.
You should be wary of any guarantees – not because they are dishonest, but because they might be impossible to honor. FXCM has a no negative balance protection clause in its client agreement and FXCM was almost wiped out. If the Swiss event happened in the euro or pound, FXCM would have been bankrupt. A no negative balance guarantee from a bankrupt entity isn’t worth anything.
Thanks Shaun.
You are right of course. Trading is risky and FX especially, as, other than CME/Globex currency futures, the market is not centralized. FX allows to trade strategies impossible to implement with futures, which is why I moved there in the first place. So maybe it’s a good idea to open an account with honest folks and try to avoid the crazy times if possible at all. On the other hand, without that 01/15 disaster I would have implemented my EA strategies without knowing at all, what risks I’m really taking! So the loss I suffered was a bad, but looking back somehow necessary experience. Since then, no EA goes live on Metatrader, which can’t turn 01/15 on the USDCHF into a profit (or shuts down in time).
Btw. I got my stops on the 5 lot long EURCHF below 1.20 filled around 1.1940 on two brokers I use. The problem arose, when I went long EURCHF below 1.00 without a stop, as I never ever thought prints below 0.80 possible, but feared getting stopped out in the volatility. FinFX had halted trading in CHF products at all, JFD had reasonable prints, but huge spreads and GKFX, where I had my EURCHF position in the first place, had a low tick around 0.44. Actually in the end I had to be happy to be taken out at 0.88 at a huge loss, as it could have been a lot worse. EURCHF long 0.98 down to 0.44 on 2 lots would have been a 130k US$ loss, if I calculated that correctly.
That’s quite the war story! One of my tweets at the time was how it took all my restraint to not enter a trade.
Pepperstone looks good – naturally they’re not available to U.S. clients. Thank God I have a similar broker who doesn’t allow themselves to be bullied by the U.S. government and who doesn’t mind opening their doors to U.S. clients.
I agree. I don’t think it’s fair or reasonable to insist that US traders must go with someone that’s US regulated. It’s my money. I should be able to send it wherever I darn well please.
Preach on Brother Shaun!
Thanks Mo!
Hi , I have a live account with Fx Primus … really predicate if you can share your views on this broker…. thks
Hi Belinda,
I don’t know anything about FX Primus. I cannot comment one way or the other.
Hi Shaun, Appreciate your views on ICMarkets. Thanks.
Hi Hartono,
I don’t have any experience with ICMarkets, so I can’t weigh in good or bad.
–Shaun
I’m curious as to why you would recommend Aussie brokers, which have no equity protection, over UK-based brokers, which have FCA-backed protection to £50K?
It often takes years to get your money out of the FCA. The bankruptcy usually needs to clear before the funds are paid.
A substantial portion of the article is about going to a jurisdiction where the banks are robust and solvent. Northern Rock and RBS are good counter-examples to why the UK is not a great place in the long run.
Thx for the reply. So just so I understand you correctly, are you saying that you believe it is better to go to a region where banks appear more stable but without some insurance of your assets than it is to go to a region with banks appear less stable but do have some insurance (though it may take time to collect)?
Yes, that’s what I’m saying.
Hello, Good Morning, Mr. Overton.
Do you still recommend Pepperstone as a good broker to work with ?
I am asking you that because I am intending of living off FX and as so, it is crucial for me the honesty and reliability of the brokerage I’m going to seat my money with.
Hope hearing from you as soon as possible.
Thanks in advance,
Ricardo.
Hi Ricardo,
Yes, I still recommend Pepperstone. I currently have over $10,000 on deposit with them.
–Shaun
Shaun,
My wife and i would like to start trading FX. I am about 10 years away from retirement and would like to start educating our self to take on a second career. But there are so many Websites and people plugging there ways as the best and it is totally confusing to us. We came across your materials and you seem to be one of the good guys out there. Can you give us some advise how to get start. We are reading every and anything we can get our hand for the 3months. We are working on a plan ( goals, objectives etc..)but still need some directions. Currently we are reading Flashboy by M.Lewis and Turtle Trader by Michael Covel. Are there any books you can recommend that have help you.
Thank you for you advise.
Ian
Ian,
Thanks for reaching out. You’re about to embark down a long and difficult journey. I always tell people that trading is the hardest easy money I’ve ever made (translation: it’s very, very difficult).
I recommend staying away from most of the educational material, although the books you mentioned are good. Michael Covel is widely respected.
What is your current profession? That will often guide your approach to trading.
–Shaun
Hi Shaun! First let me thank you for patiently answering all the comments. Was wondering if you have any opinion about Australian broker IC Markets.
Thanks!
Hey Juan,
You’re welcome. It’s a real pleasure helping out newer traders.
I don’t have any personal experience with IC Markets, but I’ve heard good things about them.
–Shaun
Hi Shaun,
Just a note. MB Trading, as they are being acquired by TradeKing, will no longer have ECN available for Forex. It will go through GAIN Capital who will be the counter party. I’ll have to see if there is any issue withdrawing funds.
I was going to ask your opinion on FXCM but saw what you posted above. Not sure who I can go with at the moment. Oanda is also a market maker and my strategies use tight stops. I don’t have enough volume for ILQ. Back to the research table again unless Oanda isn’t what I fear.
Good ECN anyone? Is some company buying MB Trading’s forex business?!
Trade King will own MBT, so the only forex ECN that I liked is probably going bye-bye. I believe that Oanda is likely a good alternative. Yes, they do run a b-book, but their company culture is one of maybe 3 firms in entire industry that would genuinely like to see profitable traders.
And ILQ doesn’t accept US clients. :/
Correct… which is ironic because it started out as a US company. Now it’s “Australian”
Hi. What do u think about SkyFx is it trusted broker and spread is it ok?
Hi Esa,
I don’t know anything about them. I’ve never heard of them.
–Shaun
Hello Mr. Shaun,
Need to have your advise on bforex brokers. Do I go ahead and deposit money with them or not?
Hi Abubakar,
I don’t know anything about bforex, so it’s not something I feel comfortable endorsing.
–Shaun
Hola amigo quiero preguntarle si tiene alguna experiencia con SkyFX y también con investcm, he estado aprendiendo varias cosas del mercado forex, estuve trabajando un tiempo con el bróker FXCM pero estas empresas tienen una oferta que me llama mucho la atención me gustaría mucho escuchar su opinion
FYI, MB Trading was acquired by TradeKing Oct 2015.
sorry….I just saw this posted in the middle of this thread…..
No worries…
Hi sir
Any idea about broker svsfx.com ?
Any idea about brokers for Indian customers?
Hi Karan,
Good question, but it’s one that I don’t know the answer to. I’ve never heard of that broker and India hasn’t come up much for me. Sorry that I couldn’t be of more help.
–Shaun
soalan saya antara pepperstone dan forex.com yang mana lagi sesuai untuk berdagang?
I prefer Pepperstone because their spreads are more narrow and they don’t trade against their customers.
Hello, i am wondering if you have an opinion about Lmax and Interactive Brokers.
Since my preferred platform is Sierrachart these are the 2 options i am left with.
Another possibility would be to pay for the platform and data feed and execute trades somewhere else but i prefer a all in one solution. Deposit would be around 100K
Both are great options, especially for your account size.
Just to update for the summer of ’17, and taking into account EA success, VPS, and your three important questions, which brokers would you recommend for USA traders?
thanks
You only have 2 choices: GAIN or Oanda. They’re both ok.
Thanks for that info. 50:1 leverage is enough to run a decent EA? And their market making won’t hinder EA profits? (Tallinex just threw me out) Do you have a preference between the two?
50:1 is waaaaaay more than you need. It’s more than enough rope to hang yourself with, so be careful.
No, the market making assumes that some clients will be profitable. If they don’t like your flow, they just send your orders straight into the interbank market.
ooops I meant their desk dealing not market making
Don’t know what this means: “If they don’t like your flow, they just send your orders straight into the interbank market.”
If the broker doesn’t like the way that you trade, then they will let somebody else take the other side of it instead of themselves.
This is a good thing? Why wouldn’t they like the way I trade? They’re losing too much? Thanks
Yes, it’s a good thing. All you care about is “Did I get filled on my trade at a good price?”.
They may not like your holding time. They may have too much exposure to your instrument and so can’t afford more risk. You might be on a big winning streak. There are a lot of reasons, none of which really matter to you if your execution is up to snuff.
Okay, thanks.
Just curious if you still trade with Pepperstone Australia?
Does the time difference affect any spreads you get during the UK and US market times?
Yep, I still trade there. No, the time zones are irrelevant to spreads. Everyone has fluctuating spreads across the different market sessions.
Olá Shaun,
Quero perguntar-lhe se está a par da decisão da Pepperstone AU, de transferir os seus clientes da zona Euro para a Pepperstone UK?!
Estão a limitar a abertura e o fecho das posições até 25/08/2017, sendo que a partir daí só será possível fechar ad posições abertas até 08/09/2017.
Não estão a ser sensíveis a quem tem posições de longo prazo, que não pode fechar subitamente, sem incorrer em elevados prejuízos.
Poderei recorrer a que entidades reguladoras, para fazer valer os meus direitos?!
Muito obrigado e os melhores cumprimentos.
Closing and reopening a trade is nearly identical. You’re paying a spread cost, but it’s pretty minor for a long term trader.
The broker has complete authority to limit or restrict trades in an account. They are your risk counterparty. They are allowed to manage their risk by controlling when, what and where you are allowed to trade.