This page gives you the criteria to apply to any provider, in order of importance, and the signs that should end the conversation. The first criterion, the licence, outranks all the others. Your protections come from the company that opens your account and the regulator that licensed it. If that company isn’t on its regulator’s register, it’s outside every protection described on this site, and nothing else about it matters.
Key points
- Check the licence by name and number on the regulator’s own register, never on the provider’s website. A firm not on the register is outside every protection.
- Your money is segregated if the company that opens your account is authorised in the EU or the UK. Segregated means it’s kept apart from the firm’s own.
- Costs can only be compared all-in, for a stated trade size and holding period. The spread (the gap between the buy and sell price), commission, financing and currency conversion go into the all-in total.
- A provider’s execution policy, withdrawal terms and complaints route each come as written documents. If the provider can’t show you all three, you shouldn’t use it.
- Red flags include promised returns, bonuses tied to trading volume, pressure to deposit and an address nobody can check. Any single one of these is enough to outweigh every other feature.
Licence verification against the public register
Licence verification means finding the company that opens your account on the register kept by the regulator that licensed it. Next, confirm that the company named in your account agreement holds the authorisation. The same company also has to have permission to offer CFDs to retail clients, who are ordinary customers not classed as professionals. Every EU national regulator publishes its own register. In the UK, the FCA publishes the Financial Services Register and a firm checker (Financial Services Register, FCA Firm Checker).
Do the check on the regulator’s site. Never use a link on the provider’s site to do the check. A cloned website can carry a real firm’s name and number with a different bank account (FCA on online trading scams, clone firms).
Two details decide whether the check passes: the company and the permission. Big providers run several companies under different regulators. The protections you get are those of the company named in your client agreement, whatever the group is called. Authorisation for one activity doesn’t cover another. The register lists what the firm may do. The how to check a licence steps set out the check in order.
Client-money segregation
Client-money segregation means the provider holds your deposits in bank accounts separate from its own money. If the company that opens your account is authorised in the UK or the EU, that money isn’t the provider’s to use. Its creditors also can’t claim it if the provider fails.
Segregation protects you if the provider fails, not against trading losses. A company regulated outside these rules may not offer segregation. A global company’s promise to keep your money separate is only as strong as its own regulator’s supervision.
The all-in cost comparison method
The only fair way to compare providers on price is the all-in cost comparison method. Because some providers charge only through the spread while others add a commission, you can’t compare them line by line (account types).
- Fix a trade for the market, size and holding period you actually plan to use. For instance, you might hold one mini lot of a major currency pair (10,000 units) for five nights or 100 share CFDs for two weeks.
- Add the spread as it stands when you place your trade, not the advertised minimum. When the daily rollover arrives, the point where overnight charges apply, the spread can widen to several times its daytime size (forex trading).
- Add commission on the opening and the closing trade. Include any minimum charge per trade.
- Add overnight financing for the whole holding period at the provider’s published rate. Overnight financing is the daily charge for holding a trade open. If a weekend falls inside the holding period, include the triple charge (costs and fees).
- If the market and your account use different currencies, add currency conversion. Conversion applies to your profit or loss. It also applies to the margin, the deposit held against your trade, if the provider converts that too.
- Compare the totals. Then check inactivity and withdrawal fees separately, because both apply to the account and neither is tied to the trade.
The costs and fees page runs through this approach for both a day trade and a six-week hold. The usual result is that the provider that costs least for one holding period won’t be the cheapest for another.
Execution and slippage policy
An authorised provider’s execution policy is the document that explains how it fills your orders. It answers the questions that decide what you really pay on top of the quoted spread.
The policy states whether the provider fills your order at the price you asked for or at the next available one. It explains how the provider handles slippage, the difference between the price you asked for and the price you got, when that difference is in your favour. It also covers when the provider requotes and what happens to orders during a sudden price jump. Last, it says whether the provider takes the other side of your trades itself or passes your orders to another firm.
Conduct rules under MiFID II, applied by the FCA and the EU regulators, make every company they authorise have this policy (Directive 2014/65/EU). Those companies publish it on their websites. A company that claims a UK or EU licence and doesn’t publish one is either not authorised or not following the rules. A global company follows its own regulator’s rules, so check what it publishes.
Slippage is the part of execution you can measure yourself. Using a small live account, compare the price on the order ticket with the fill on your statement. Do it over a few dozen orders and at the times of day you trade. A demo won’t do for measuring slippage, since it usually fills you at the price you asked for (how a trade works).
Withdrawal terms, platform and support
Withdrawal terms tell you how quickly you can take money out and what it costs. These are the terms people most often discover too late. The provider’s documents list the methods, the processing time, any fee and any conditions. A condition might be a minimum amount, or a rule that you withdraw to the same method you deposited with. A small withdrawal early on tests all of the withdrawal terms.
Platform and support come after the money questions. Check that the platform you plan to use is on offer and look at how the provider has set it up (trading platforms). A demo account lets you see both. Most providers also offer more than one kind of account, and the account types page explains what a standard, raw spread or swap-free account changes. Then find out whether you can reach support in your language at the hours you trade.
The criteria, in order
The criteria for choosing a provider are shown below in order of importance, along with the document or check that covers each one.
| Criterion | What to find out | Where the answer is |
|---|---|---|
| Authorisation | The company you sign with is on the regulator’s register, with permission for retail CFDs | The regulator’s register, searched by name and number |
| Protection of your money | Segregation of client money | Your client agreement |
| All-in cost | Spread, commission, financing and conversion for your own trade size and holding period | Contract specifications and the cost comparison method |
| Execution | How orders are filled, slippage policy, requotes, what happens in a gap | The published execution policy, and the slippage you measure |
| Withdrawals | Methods, timing, fees and conditions | The terms, and a small early withdrawal |
| Platform | Which platform is offered and how it’s set up | A demo account |
| Support and complaints | Whether you can reach support, in what language, and the route to the ombudsman | The terms and the regulator’s complaints page |
Red flags
Red flags are warning signs. No other strength can make up for them, and any one of them is a reason to stop.
- Guaranteed or promised returns. No return on a CFD can be promised.
- Bonuses tied to deposits or trading volume. Companies covered by EU and UK rules are banned from offering incentives to retail clients, because incentives push people to trade too much (ESMA ESMA Decision (EU) 2018/796, FCA PS19/18). If a company gives you one, it sits outside those rules (deposit bonuses).
- Pressure to deposit by phone or message, especially with a deadline. Belgium’s regulator banned cold-calling to sell CFDs outright (FSMA regulation of 2016).
- An address nobody can check, a company that is registered in one place but operates from another, or a licence from a regulator with no conduct rules for retail clients.
- Account managers who trade for you or advise you on trades are common in frauds (FCA on online trading scams). An execution-only provider, one that only carries out your own orders, may offer neither service.
- Trouble withdrawing, in any form: a demand that you trade more first, extra documents demanded only when you withdraw, or fees that appear only then.
Risk warning
A well-chosen provider doesn’t change what the product does
Even with a well-chosen provider, the product itself works the same way. An authorised, cheap provider that keeps your money separate and answers the phone still sells a leveraged contract, where your trade is bigger than your deposit. Most retail accounts lose money on it. The loss figures regulators publish were gathered at authorised providers, not at frauds. In 2018 ESMA reported national regulators’ findings that between 74 % and 89 % of retail accounts lost money (ESMA press release, 27 March 2018). Picking a good provider takes away the chance of being cheated, but the product’s risk stays.
Questions about forex brokers and CFD brokers
Most questions about forex brokers and CFD brokers want to know what a broker is, which one is best and which offers the lowest spread.
What is a forex broker?
A forex broker is a company that allows you to trade currency prices using its platform. Most retail brokers structure the trade as a CFD, so the broker becomes the other side of your trade and holds your deposit. A CFD broker is the same type of company and offers the same contract on indices, commodities and shares as well.
Which is the best forex broker?
No forex broker is the best for everyone, and TheTraderWiki doesn’t name one. Which broker suits you depends on your country, your account size and the markets you trade. First check the licence, then how your money is protected and after that the all-in cost of your own typical trade. The comparison lays out what each broker publishes, side by side and in alphabetical order.
Which forex broker has the lowest spread?
Which forex broker has the lowest spread depends on the pair, the account type and the time of day. A raw spread account has a smaller spread but adds a commission, so the spread alone doesn’t show the cost (account types). Compare the all-in cost for your own trade size and holding time.
What is a regulated forex broker?
A regulated forex broker is a company that a financial regulator has authorised and supervises. The company named in your client agreement is the one that matters, because one brand can sit on several licences with different protections. You can see what a major regulator’s licence adds to an offshore one on the is trading safe page.
Why do some sites name one broker as the best?
Sites that name one broker as the winner are often paid for each customer they refer. These referrers are known as affiliates and introducing brokers, and the amount they receive can depend on how much you deposit or trade (introducing brokers and affiliates). No broker pays to be listed on TheTraderWiki.
Is a prop firm a broker?
A retail prop firm isn’t a broker. It sells a trading test for a fee. If you pass, the firm says you will trade its capital. Most of these firms hold no licence to provide investment services, so the protections on this page don’t apply to the fee you pay (prop firms).
Sources
The original documents this page cites, in the order they first appear.
- Financial Conduct Authority, FCA
- Financial Services Register, FCA
- FCA Firm Checker, FCA
- Online trading scams, FCA
- Directive 2014/65/EU on markets in financial instruments (MiFID II), EUR-Lex, 2014-05-15
- European Securities and Markets Authority, ESMA
- ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union, Official Journal of the European Union (EUR-Lex), 2018-05-22
- PS19/18: Restricting contract for difference products sold to retail clients, FCA, 2019-07-01
- FSMA Regulation establishes a framework for the distribution of OTC derivatives (binary options, CFDs…), FSMA, 2016-08-08
- ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors, ESMA, 2018-03-27