How to Start Forex Trading: Check the Broker First

What should you check before opening a forex account?

Learn the basics and practise with virtual money first. If you still want to trade after that, the next step is the one many people skip: checking the firm.

A low minimum deposit, a well-known trading platform or a row of regulator logos is not enough. You need to know which company you would sign with, what it may offer where you live, and what it really costs.

One brand can run several companies. A website may send US, Canadian, UK and Australian customers to different ones. Copy the legal name, registration number and address from the client agreement for the account you would open. The company on the marketing page may not be the one you deal with.

Also check what you would be buying: real currency, US retail forex, futures on an exchange, or CFDs. Each comes with different rules and protections.

How do I check that a forex broker is regulated?

Look the company up on the official register for where you live. Don't rely on a list of famous regulators. The rules depend on your country and on what the firm does for you.

Good places to start:

• US: NFA BASIC
• Canada: CIRO's dealer pages
• UK: the FCA's guide to checking a firm
• Australia: ASIC Moneysmart
• EU: the regulator in the firm's home country, such as CySEC in Cyprus, and the regulator in your own country

Registration lowers some risks. It does not promise profits, and it does not rule out fraud.

How do I spot a copycat broker?

Fraudsters copy the name and registration number of real firms. Then they change the website, email or phone number. The FCA calls these clone firms.

So use the contact details on the official register, not the number in an advert or a message. If a salesperson says the register is out of date, check with the regulator directly.

Don't send ID documents until you are sure who you are dealing with. A registration number that belongs to someone else is a warning sign, not a near miss.

How do I compare forex broker costs?

Ask for the spread, the commission and whether it is charged each way, overnight fees, currency conversion and withdrawal fees. A raw or zero-spread label says nothing about the total bill.

Compare using the same example. Take 10,000 euros of EUR/USD in a US dollar account, where one pip is $1. Account A has a 2-pip spread and no commission, so a quick round trip costs about $2. Account B has a 0.4-pip spread plus $1 commission each way, so it costs $2.40. These are teaching numbers, not real broker prices.

Compare the same pair, size and time of day. A spread advertised as "from 0.1 pips" is not always the spread you will get. The spread lesson shows how to turn quotes into money.

What happens if a trade goes badly?

Find out four things before you trade:

• the margin rules
• when the firm will close your trades
• how price gaps are handled
• whether you can lose more than you put in

Rules differ by country. US NFA deposit rules are not the same as UK or Australian CFD rules. A high leverage limit is not a reason to use it.

Ask what happens if several trades lose at once. Margin is not a loss budget, and an ordinary stop does not promise your exit price. The firm may close your trades in its own order, so read the rules before you need them.

How do I test a trading platform before using real money?

In a demo account, check the order ticket. Look at the units, the currency, the buy and sell prices, the stop type and the confirmation. Learn how to cancel an order, find your open trades and notice when prices stop updating. Practise changing the size of a trade and closing it.

A demo cannot show how real orders will fill, or how withdrawals work. Read the withdrawal times, fees, bank rules and complaints process separately. A friendly live chat is useful. But it cannot tell you if the firm has enough money, or what protects you.

How do I make the final decision?

Save a short note for each firm with:

• the date you checked
• the legal company and the product
• its permissions where you live
• a full cost example
• any open questions

Don't call a firm the best because it wins on one number. If something important is still unclear, your check is not finished.

Not sure you are ready? Work through the forex practice workbook and learn how to spot forex scams. When you are ready to compare providers, start with our forex broker comparison.