With so many Forex brokers to choose from, it's certainly no easy task to find the perfect forex broker to match your trading style and preferences. As you may know, currency is an unregulated market as it is not traded on the stock exchange, which means that the prices you see and receive from one broker may vary from one to another. Forex brokers fall mainly into one of two classifications –
1) Market Makers (MM) and
2) Trading in Electronic Communication Networks (ECNs).
Most of the brokers around are Market Makers (MM). They offer traders the means to trade with and against the broker. MMs offer a single bid / price for each currency pair. They usually offer a fixed spread.
The second group is the brokers of the electronic communications network (ECN). They offer merchants the opportunity to publish their own bid / search rates. As a result, traders often see multiple bid / ask prices driven not by the broker but by other spot traders and liquidity providers (banks). They usually offer you a quote.
– Provide free software for graphics and news feeds
– Prices are less volatile than ECN brokers
-Often provide a user-friendly and analysis interface
-He can take a stand against you
-The prices they offer may be worse than ECN brokers
-They can manipulate prices and trigger your suspension, or prevent you from reaching your target profits. This is because they may take a losing position against you
-Huge price slippage usually occurs during data transmission hours or their platform may not allow orders to be made during high volatility
-Most of them inhibit scalping, which can have a minimum stop loss of space or scalp performance can be very "manual" or complicated.
-You can usually get better deals / offers because they come from several different institutions or banks.
-Bids between offers and requests can be equal to zero spread or small spreads at times of liquidity (mostly in the afternoon, DG)
-They will not trade or hold a position against you, but will transfer your orders to a bank or other customer at the other end of the transaction.
-You will be able to bid between the bid and ask for a chance to fill it
-If they support Stop-Limit orders, you can prevent them from slipping in the news by making sure your order is either fulfilled at the price you want or not at all
-The prices can be more volatile, which will be better for scalping
– Most do not offer integrated graphics
-Don't offer integrated news anymore
Shady Broker Practices Reorders:
These days, redemptions are almost a thing of the past, but if you find that the broker is in the habit of opposing alternative deals, you will be well advised to find another broker.
Slippage: Slippage is a pricing practice used by some brokers to generate an additional pips profit or two in a given trade. Instead of making available, the broker raises the tariffs with an additional pips. If the execution price is consistently higher (as in the case of a purchase order) or lower (as in the case of a sales order) than the one displayed on your screen, find another broker. This is a difficult practice to document, but if you suspect this is happening, move your business elsewhere.
Pricing Irregularities: There are two cases where you will see a price jump – a change of screen that shows a significant, momentary price movement
1) when the broker deliberately raises prices to cancel the trader's position or
2) when the broker's liquidity provider does the same. Like slipping, spikes are difficult to document, but if you think you've been tampered with, consider changing brokers. Do not buy the argument that this is a programming error. Spiking is a deliberate means by which some unscrupulous brokers and liquidity providers manipulate the market.