Because of the nature of online forex trading – 24/7 market, no central exchange and clearing house, emerging spot forex market still remains unregulated unlike other more mature financial markets (futures or stocks). There are many forex scams or Forex Fraud according to Commodity Futures Trading Commission (CFTC), whose primary goal is to ensure the integrity of the futures and options markets. It is investors own responsibility to find the best online forex broker to participate the biggest financial market in the world. The following criteria can help investors make the decision.

Safety of Funds

The first and most import criteria is to find a broker that traders can trust with their money. The forex trading community will never forget the Refco scandal just happened a couple of years ago, ten of thousands Refco FX retail clients couldn’t get their hard earned money back. You can’t even trust a reputable company! It’s a wake-up call to all forex traders that online forex trading is still a wild west.

Regulation Registration

While the spot forex market remains unregulated, most market participants are required to register with various authorities. For example in the United States, brokers are required to register with NFA (National Futures Association) and CFTC. The registration itself will not guarantee that you can get a full protection, but without the registration is a sure sign of raising flag. National Futures Association (NFA)’s Background Affiliation Status Information Center (BASIC) is a valuable resource for traders to run a background check on brokers under investigation. If the broker is not registered with CFTC, or not a member of NFA, better safeguard your money immediately. Even if the broker is registered, make sure if there are any complain filed under their firm name or NFA ID.

Integrity & Ethnics

It’s difficult to tell forex brokers’ trading ethnics without real trading experience with them. Check BASIC is a good start point. Another option is to look for information online by visiting forex forums to ask questions about your concerns.

Demo vs. Real

Before opening a real account with any online forex broker, traders should test their free demo accounts to be familiar with forex platform. Be aware of the difference between demo and real trading, since there is no slippage in demo, and the trading transaction is executed immediately. Traders need to keep a close eye on the volatility, spread expansion, and expediency of execution under fast moving market condition when go live.

Customer Services

Another import criteria looking for the best forex broker is to have a good customer services. Don’t hesitate to make a phone call to ask questions, if they can’t help you right now, they might be of little help after signed up.

There are other criteria need to be considered when seeking the best forex brokerage, such as the spread, minimum deposit, easy access of fund, and leverages. Never naively believe what a broker or ads tell you, make sure to search online to get forex broker comparison information from various forex broker rating, and forex broker reviews. With the assistance of the best forex broker, it will definitely smooth your path to forex trading success.