How to choose a forex broker: a beginner's checklist

A broker holds your money and executes your trades, so choose one for safety, not for bonuses. Here is what to check, in order.

5 min read · Updated: 2026-10-19

In short

1. A licence from a strong regulator that you can find in its official register.
2. Client money held in segregated accounts.
3. Negative balance protection.
4. Clear spreads, commissions and swaps, worked out for your trading style.
5. An account type that fits your deposit size.
6. A demo account and a small test withdrawal before any serious deposit.

1. Regulation

A regulator is a government body that licenses the broker and requires it to hold capital, report and follow client protection rules. If the broker breaks the rules, clients have somewhere to complain.

Strong regulators include, for example, the FCA (UK), ASIC (Australia) and CySEC (Cyprus, applying EU rules). There are offshore regulators too: their requirements are looser and client protection is weaker.

How to check:

1. Find the licence number and the legal entity name on the broker's site, usually in the footer.
2. Open the regulator's register on its official site, for example the FCA register or the CySEC register, and look the firm up by number.
3. Match the website domain and company name. Scammers often copy a real broker's details; this is called a clone firm.
4. Check which legal entity will actually open your account. One group can run several companies with different licences, and clients from different countries are served by different ones.

2. Protection of client money

• Segregated accounts. Client money is kept apart from the company's own money. If the broker goes bankrupt, its creditors cannot take your deposit to cover its debts.
• Negative balance protection. If the market gaps and your loss exceeds your deposit, the broker writes off the negative balance and you do not owe it anything. It is mandatory for retail clients in the EU and UK, but not always offshore.
• Compensation scheme. Some jurisdictions have a scheme that returns part of your money if a broker fails, such as the FSCS in the UK or the ICF in Cyprus. Payouts are capped, so check the current limits on the scheme's site.

Also find out how the broker closes positions when margin runs short: at what Margin level the Margin call and Stop out kick in.

3. Spreads, commissions and other costs

The Spread is the difference between the buy and sell price. A broker earns from the spread, from a commission per lot, or from both.

Example on EUR/USD, 1 standard Lot (100,000 EUR), Pip value of $10:

The numbers are illustrative, but the logic holds: if you trade often, a raw-spread account with commission is usually cheaper.

Also check:

• Swaps: the fee or credit for holding a position overnight. It matters if you hold trades for days.
• Deposit and withdrawal fees and how long withdrawals take.
• Inactivity fees if you do not trade for a few months.
• Execution: Slippage and requotes around news. The easiest way to see them is on a small live account.

4. Account types

• Standard: no commission, costs are built into the spread. Simple to start with.
• Raw / ECN: market spread plus a fixed commission per lot. Good if you trade often. For execution models see ECN and STP and Dealing desk and market maker.
• Cent or micro: tiny lot sizes, so you can trade real money with a very small amount. A good step after demo.
• Swap-free (Islamic): no overnight swap, though sometimes a different fee replaces it.
• Professional: higher Leverage but less protection, for example negative balance protection may not apply. Beginners do not need it.

Watch the leverage. In the EU, UK and Australia retail clients get at most 30:1 on major currency pairs. Offshore firms offer 500:1 or more, but high leverage is not a perk; it is a fast way to empty an account.

5. Demo account and test withdrawal

1. Open a demo and try the platform, for example MetaTrader or the broker's own: is it easy to set a stop, can you see spreads and swaps?
2. Remember that demo execution is perfect. Real-world slippage does not show up there.
3. Deposit a small amount, make a couple of trades and withdraw part of it. If the withdrawal drags, or they ask for a tax payment or new documents for no reason, stop there.

Red flags

• No licence, or a licence you cannot find in the regulator's register.
• Promises of guaranteed profit, or a personal account manager who trades for you.
• Deposit bonuses that lock your money until you trade a huge volume.
• Pushy calls and messages: deposit now or you will miss out.
• Being asked to pay a tax or fee before you can withdraw.
• Paying into a private person's card or a crypto wallet instead of a company account.

Similar schemes are covered in the scams guide. Market basics are in what forex is.

If you want to look at our partner broker, visit its site and run it through this same checklist: licence, legal entity, account terms.

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