Forex: 8 Things to Know About Forex Brokers
1. Transaction Costs
- Brokers make their money by charging you a routing fee or by padding the spread, plain and simple. They may claim they have commission-free trading, but they pad their spreads excessively or their “low commissions” may not really be that low. Make sure you are doing your homework here. Compare transaction costs, then compare them some more.
- MB Trading FX proudly has some of the lowest trading costs in the world, as noted by Stockbrokers.com in 2011. Our proprietary MBTFX routing system connects you directly to liquidity providers for the best possible prices. The EXN (Electronic Xrossing Network) Pay for Limits program has some of the lowest routing fees and pays you for adding liquidity to our system. Our Free EXN model charges no commissions and still offers some of the tightest spreads you can find. Compare HERE.
2. Execution
- Some brokers are deal desks that make money in the spread. Others route your orders to a single bank preventing best execution. Yet others claim to let customers trade with each other, but don’t allow you to post your Limits for others to see. How does one know what’s real?
- At MBTFX, we combine liquidity from multiple banks with our Electronic Xrossing Network (EXN) to give you multiple liquidity destinations. Do other brokers offer an Electronic Xrossing Network? Use “The MBTFX Test” to decide. Pick any currency pair on any other broker’s system. (For simplicity, use a pair with a three or more pip spread.) Let’s say the Bid is 100 and the Ask is 103. Now enter an order to buy at 101. If you and everyone else on that system does not immediately see your new Bid at 101, thus now making the market 101 by 103, then you are not on a truly transparent Electronic Xrossing Network. It’s that simple. And with minimum spreads of only 1/10th of a pip on all pairs, customer orders help you to reduce trading costs. Click HERE to see how it works.
3. Trading Tools
- Some brokers lock you into one trading platform with only a few order types. Some don’t allow you to connect with the services and tools you want or need to be a better trader.
- MB Trading FX doesn’t handcuff your trading by limiting your trading tools With MBTFX, you bypass the middleman and trade directly with the biggest market participants for lower costs and quicker execution. MB Trading FX offers award winning platforms—including MetaTrader 4—with up to 28 order types, robust charting, and fast non-deal desk execution. MB Trading FX has customized MetaTrader 4 to remove the deal desk and eliminated the Virtual Dealer Plug-in. Trade your way on any of our 7 platforms, including MBT Web and MBT Mobile. We also allow third party developers to connect to us via our API and SDK. So if you outgrow our powerful charting and analytics tools, or want to add and automated tool, you are free to do so with any of our partners. We connect with the most popular products on the market. And for advanced traders with programming knowledge, we even allow you to create custom Expert Advisors.
4. Security
- Can you point to Cyprus on a map? Do you know who is regulating traders in that third world country promising unbelievable leverage? Before you place your hard earned money with a broker, you should make sure it’s going to, well-regulated market, not a country where trading is still a bit of a Wild West show.
- MB Trading FX is dedicated to protecting your information. We are regulated by the NFA and CFTC in the USA, organizations known for stringent rules and regulations, which most other countries use as their guide. We take additional measures, such as Redundant and Automated Manually Observed Risk Management systems, to ensure you can trade with trust and security.
5. Price Improvements
- Other brokers may tout their price improvements as a reason to give them a try. But look closer and you may see that their “price improvement” is just the market fluctuating naturally. That is not a price improvement.
- A price improvement at MB Trading FX means that the market was 10 when you wanted to buy and you got filled at 9. That is a true price improvement.
6. Fill Speed
- Some FX brokers make some pretty outrageous claims about fill speed—beware of what they say! If they talk about fill speed in seconds, run away.
- With MBTFX, we route your orders to our liquidity providers or other customers in milliseconds, not seconds. Our cancel speed (sometimes more important than fill speed) is even faster than our order processing speed, something every trader can appreciate.
7. Spreads
- Don’t be fooled by claims from brokers implying spreads can be smaller than the minimum price difference (sometimes down to zero!). They are falsehoods. Make sure you are reading the fine print.
- At MB Trading FX, our minimum spread truly is 1/10 of a pip and we continue to tighten our average spreads by posting your limit orders for all to see. An order resting on our limit book displays is not held by us—compare that to other brokers. They may allow you to enter prices away from the market but the true test is whether or not they display them to other clients. We do, that’s why our spreads continue to get tighter as we grow. We want you trading cost to go down.
8. Trust
- Trust in your broker is crucial. Whether it is transparent trading, non-deal desk execution, or ethical conduct, your broker should have your back. Sadly, this isn’t always the case. Research the NFA and CFTC records. Some brokers have racked up millions in fines…and are still operating.
- MB Trading FX is a privately owned company that is focused on you, the trader, and not our stock price. We have worked tirelessly to develop our proprietary EXN system to give you the cost effective and transparent way to trade FOREX. Check the NFA/CFTC for MB Trading FX— under regulatory actions you’ll see a big, fat ZERO.