How to examine a broker

Guest post by forum member: “Successful use of scalping is directly dependent on your broker. Experienced traders choose brokers very

Guest post by forum member:

“Successful use of scalping is directly dependent on your broker. Experienced traders choose brokers very carefully with consideration of many factors.

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The first factor, is the spread on the traded currency pair . Most of the brokers give the information about spreads on traded currencies on their websites, but I would recommend to check the spread before you start the trade. I would check the spread on a real account ( you have to open real account, but you can quickly close it and therefore check how quickly you can withdraw money).

Also, if your broker is ECN, check all the commissions in order to make sure that a broker won’t “eat” all your profit.

Than I recommend to check the execution speed. In order to do this you have to place your advisor to trade with minimum lot and estimate the time interval between the starting time of sending order and it’s ending time. Go to the folder of log files C:Program FilesmetaTraderlogs and look on the log file.

Example :

00:56:26 ‘1003718’: order sell market 0.20 USDJPY sl: 0.000 tp: 0.000

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00:56:27 ‘1003718’: request was accepted by server

00:56:27 ‘1003718’: request in process

00:56:27 ‘1003718’: order was opened : #1635944 sell 0.20 USDJPY at 91.180 sl: 0.000 tp: 0.000

We can see that advisor made it’s request for opening 00:56:26 and order was opened at 00:56:27 – good work.

You have to also analyze all the teaks around a particular order. It will help you to discover manual intervention.

Broker can “throw” quotation in the stream of quotations in order to beat your “stoploss” or to give you maximum worst price. That’s why exploring of teaks will make everything clear. Analyze 10-20 orders.

In the future, when you will pick a broker and start the state, I would recommend you to analyze every order.

So analyzing of spreads, speed and teaks around a order, will give you the full understanding of your broker. I recommend www.MT4.ca – this is Canadian partner FXOPEN picked by me for the scalping. The only disadvantage of it is that the broker is not registered in NFA, even though most of USA brokers transfer their clients to other jurisdictions to escape NFA regulation.”

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