How Do We Compare Prop Firms? View 2023 Methodology (2024)

Forex Trading Account Spreads and Fees

Our trading cost scores depend heavily on spreads and commissions since these impact a trader’s success the most. We also consider other charges a broker may charge. You can view more detail on how we measured forex fees or you can see the breakdown on the table below.

How We Measure Spreads and Commissions

Other Fees Considered

As some brokers charge additional fees for depositing and withdrawing money, having an inactive account and other various situations, we consider these for all brokers but give them a lower weighting.

Other offerings

We award positive scores to brokers who offer fixed spreads or an active trader discount (on spreads and commissions).

Forex Broker Trading Experience

The top factors in our trading experience scores are our tested limit order and market order speeds and our experiences in account opening and withdrawals. Our model prioritises the availability of standard accounts (based on spreads) and raw/ecn (commission-based accounts) and the facility of higher leverage for professional traders.

Forex Broker Trust and Reputation

We consider appropriate licensing by a national regulator a core element of the trust a trader can place in their brokers. Financial regulators develop and enforce the rules, policies and procedures that govern how financial services providers behave, and trading with a licensed broker can offer significant protections agains fraud, theft and misuse of your funds.

Other factors that influence our trust scores include: the age of the broker, whether they have headquarters (or offices) in multiple countries and whether they’ve had any recent issues with their core regulators.

What is a financial regulator?

In most sophisticated economies, a government ministry or agency holds responsibility for overseeing and monitoring financial institutions and markets. These regulators seek to maintain the stability, integrity, and fairness of the financial system to protect the interests of consumers, investors, and the overall economy.

Not all jurisdictions afford their regulators the same degree of influence, however. A country with a commitment to free markets and minimal regulation, for example, might not permit certain interventions market downturns. A country with a strong culture of privacy might require additional controls on financial data.

At Compare Prop Firms, we’ve broken financial regulators into tiers based on strength of their regulations, extent of their oversight infrastructure, and supervisory power.

Tier 1 regulators offer the highest level of consumer protection and oversight. While trading with a Tier 1 regulator doesn’t guarantee you won’t lose money, it does mean you can feel confident that the broker must abide by certain rules around protecting your money.

The following table lists out our Tier 1 regulators.

Tier 2 regulators may exercise some of the same powers and insist on many of the same safeguards as their Tier 1 counterparts, but lack other important protections. While we consider brokers licensed Tier 2 regulators generally trustworthy, be aware that they may not be required to exert the same degree of control over client funds as a Tier 1-regulated broker. In other cases, Tier 2 regulators may form part of a less developed financial system still developing some of the institutions required to provide adequate oversight.

The following table lists out our Tier 2 regulators.

Tier 3 regulators control “offshore” brokers and seldom offer the same degree of protection and oversight as those in the Tier 1 and Tier 2 band. Brokers who are only regulated at this level can be assigned a lower level of trust.

The following table lists out our Tier 3 regulators.

Forex Trading Platforms

Our trading platform scores are aligned with the popularity of the major forex platforms. MT4 is still the most popular trading platform, particularly for automated trading. MT5 is gaining traction with its inclination towards multi-asset traders, while cTrader and TradingView are still relatively new. Mobile trading apps and social or copy trading are becoming more popular, so they are assigned a 10% weight. We also believe it’s important for brokers to offer a free, non-expiring demo account so that brokers can thoroughly test their strategies before they commit financial resources. We also like to see brokers without limitations regarding automation and scalping.

Forex Broker Customer Service

Our customer service scores focus on the channels used to deliver that service. Traders work differently, so brokers who offer live chat, email, and social media score well. We also consider the knowledge levels of the customer service teams and the quality of the broker’s self-help available as a knowledge base or FAQ. Multi-lingual customer service is considered, as are the hours of support, providing a dedicated account manager and the overall website experience.

Range of Markets

As a site focused on forex, our range of markets scores naturally favours brokers with many forex pairs available for trading. Many brokers are CFD specialists and offer CFDs on shares, cryptocurrencies, commodities, indices, bonds, and other products (e.g. options). We award brokers positive scores for providing each of these product types, spread betting (used mainly in the United Kingdom) and trading in actual shares (as opposed to CFDs on shares).

Forex Broker Education

Our scoring methodology for education resources concentrates on two dimensions – the experience level of the trader and the channels used to deliver training. We give a high weight to help for beginners, a medium weight to intermediate education and a lower rating for expert resources. Articles, blogs, webinars, eBooks and Youtube are considered delivery channels. We also like to see an in-house analyst at a broker, providing commentary and analysis of market trends, and we always find an excellent glossary helpful.

Forex Broker Funding Methods

To provide a score on funding (i.e., making deposits), our methodology considers the breadth of available base currencies as the most critical factor. We then award brokers scores based on the funding methods available (credit card, bank transfer, etc.). We review banking trends to align our weightings with the most popular funding methods.

About the author: Justin Grossbard

Justin Grossbard is the co-founder of CompareForexBrokers and since 2014 with the role of Strategic Head Of Research. He is a member of the AICD and holds a Master's and Bachelor's Degree in Commerce. He previously worked with the banking sector, including ANZ and is a contributor to Finance Magnates, Kiplinger and Forbes. He has also published a book on alternative investments which is available on Amazon.