How to Compare Forex Brokers
Though Forex brokers might appear to be similar, they are quite different once you dig a little deeper. To make an effective comparison, our research team judges every Forex broker by the same standards:
If you have any questions after reading through this guide, please get in touch with us in the comments at the bottom of the page or via our contact page.
Forex Broker Fees and Trading Costs
Forex brokers always charge fees for their services. The most obvious fee is the spread (the difference between the buy and sell price of a Forex pair) and some brokers also charge a commission per trade. But brokers also charge rollover fees, and some charge deposit and withdrawal fees. Finally, there is also the minimum deposit to consider. To find out your trading costs you will need a clear understanding of these fees.
Spreads
The spread is the difference between the buy and sell price of a currency pair and is measured in pips (the smallest amount by which a currency can change). The lower (or “tighter”) the spread, the less of your own money you will be spending when you trade.
Brokers with wide spreads or unpublished spreads are marked down in our reviews. Good brokers will publish their spreads for all the currency pairs they offer. When researching a broker, be sure that they publish their spreads and that the spreads are “tight” for the currency pairs you want to trade. If you find a broker that does not publish its spreads you should be cautious.
Some brokers have fixed spreads, meaning that they never change. Other brokers will have floating spreads which means that they can get lower or higher (“tighter” or “wider”), depending on market movements.
Commission
Some brokers may also charge a trading commission in addition to the spread. Brokers that charge a commission are known as ECN brokers; they provide “direct market access” and will have tighter floating spreads down to 0 pips. Commission varies between brokers, but the cost is usually between 4 USD – 7 USD per 100,000 USD traded.
ECN brokers who charge more than 7 USD total commission and have average spreads over 0.3 pips should be avoided and we mark them down in our reviews.
Some brokers will offer both standard accounts (with no commission and a wider spread) and ECN accounts (with a commission and a tight spread). If you decide to trade with an ECN account, you will want a low commission and an average spread close to 0 pips.
Rollover Fees
The rollover fee is a small fee charged by brokers for holding a trading position overnight. It is usually charged at 17:00 EST (New York time). This fee is based on the interbank interest rate for each currency in a currency pair. Sometimes these interest rates can work in your favour and you will gain interest on your position rather than be charged by the broker.
All brokers will charge rollover fees. This fee can only be avoided by opening and closing your trades on the same day.
Deposit and Withdrawal Fees
Better brokers will charge no fees for deposits and withdrawals, and the worst brokers will have very high fees and delayed payouts. Brokers that charge high fees or take a long time to process withdrawals are marked down in our reviews. When you are looking for a new broker, always make sure to check the fees for deposits and withdrawals for your preferred payment method. Just because a broker charges fees does not mean that they are bad, but it is always something to be aware of.
Most brokers will charge no fees for transactions via online payment systems like Skrill, Neteller or Ozow. Credit and debit card transactions are also often free, but bank wires will usually be charged by your bank for both deposits and withdrawals. Some brokers will charge a percentage of the deposit or withdrawal, which can get expensive if you make large deposits and withdrawals.
Minimum Deposit
Most brokers will require a minimum deposit to open a trading account. For some brokers this will be R70, for others, it may be R1500 or even R3000. Larger deposits usually unlock improved trading conditions and other perks. We do not mark down brokers for having accounts with higher minimum deposits, but we do think it is important for beginner traders to have an account that is not too expensive to open.
What level of minimum deposit you are comfortable with depends on your financial situation. But, brokers who expect beginner traders to spend a lot of money to open an account are being unfair.
Broker Trading Conditions
Forex brokers all have different trading conditions and they will affect your trading experience and trading costs.
Apart from the spread, there are several other important trading conditions to consider. One of the most important is the leverage offered by a Forex broker. Other trading conditions are a broker’s execution method and execution speed, the base currency of your trading account, what assets are available to trade and whether scalping and hedging are allowed.
Leverage
Leverage is money borrowed from your Forex broker to increase the size of a Forex trade. Leverage is essential in Forex trading because the movements of the market are too small to make a decent profit unless you place thousands of dollars on each trade. Brokers will always advertise the maximum leverage they offer in a ratio format, such as 30:1, 100:1, 300:1, etc. The maximum leverage varies between brokers.
Leverage can be used to make large profits with little of your own money, but you can also quickly lose more than your original investment. If the trader opened a position with 10 USD and 300:1 leverage, the traders would borrow 300 times their capital from the broker making the actual trading capital in the trade 3000 USD.
As leverage is borrowed money, the trader is responsible for the full amount of your trade. Should the trader be unable to cover the losses, the broker will use trading account funds to settle the debt. If this is still not enough to cover your losses, you may end up owing your Forex broker money, unless they offer negative balance protection
When comparing brokers, you want to see that they offer enough leverage to make Forex trading profitable. In Malaysia there are no restrictions on leverage and negative balance protection is not required. Always check that your broker as provide negative balance protection before you start trading.
Execution Speed and Execution Method
Execution speed is how fast a broker will open your trade and is linked to a broker’s execution method. We do not mark brokers down in our reviews for their execution method, but we will always mention it as we know that some traders have a strong preference.
Market maker brokers will offer instant execution, thus preventing changes in price while your trade order is processed (slippage) or the rejection and return of your trade order (requotes). When you trade with a market maker broker, they do not place your trade on the Forex market, but instead, act as counterparty to your trade. While there is a conflict of interest in this business model, because when a trader loses the broker profits, most market makers take their prices from the large banks and regulation prevents them from manipulating market data.
Brokers who offer market execution are either ECN brokers or STP brokers. ECN brokers operate as a hub for a network of liquidity providers and will automatically find the best price for your trade from the members of their network. STP brokers have more control over which liquidity provider to use and generally have faster execution speeds. Some market execution brokers are hybrid ECN/STP brokers.
Base Currencies
A broker will let traders choose the base currency with money will be held in. The most common base currency is the US Dollar (USD). The majority of brokers will also offer Euro (EUR) or Pound Sterling (GBP) accounts and in Malaysia, a very select few brokers offer Ringgit (MYR) as a base currency. We do not mark brokers down in our reviews for not having MYR accounts, but it is something we will highlight as we know how important it is for Malaysian traders.
Trading Assets
Better Forex brokers will offer 50+ currency pairs to trade. Many Forex brokers are also multi-asset brokers, especially the larger ones, which means that you can also trade other financial instruments such as cryptocurrencies, equities, commodities, precious metals, indices, and bonds. Brokers that have fewer currency pairs to trade will be marked down in our reviews. We also mark down brokers who do not offer at least a few other financial instruments to trade.
Hedging and Scalping
Not all Forex brokers allow scalping. A Forex scalping strategy is where a trader seeks to profit from rapid price changes in a short period. A scalper, a trader who employs a scalping strategy, enters and exit trades several times a day, and closes all trades on the day they were opened.
Not all brokers allow hedging on their platforms, but most market execution brokers do. Hedging is protecting yourself against adverse price movements that would affect open trades and is a form of insurance. Direct hedging is a common strategy, where a trader buys a currency pair and then sells the same pair at the same time.
Broker Regulation
Broker regulation keeps your money safe. It protects Forex traders from broker fraud, broker dishonesty, and broker bankruptcy.Simply put, you must trade with a regulated broker.
Regulators ensure that brokers abide by the law and don’t cheat their clients. They ensure that brokers keep company money and trader’s money in separate accounts. They also ensure that brokers have enough money to keep going even if they make heavy losses.
Some traders believe that unregulated brokers are rare, but this is not the case. Unregulated brokers will often claim to be regulated, so you should always check.
Checking if a broker is regulated is easy and only takes a couple of minutes (and could save you a lot of money and heartache!) Once you are finished reading this section you will be able to check if a broker is licensed with all the following regulators:
We have a separate article which will guide you in verifying broker regulation.
Broker Customer Support
Better Forex brokers have customer support available 24 hours a day (Monday-Friday) via live chat, telephone, messaging services and email. It is also important that a broker has great IT support, as setting up a trading platform can be tricky for new traders.
Some Malaysian brokers have local customer support teams who can assist in Malay, but aside from local customer support, we also highly rate brokers that offer 24-hour support and weekend support.
Brokers for Beginners
Some brokers are better than others for beginners. The best brokers for beginners will have clear and practical educational material, insightful market analysis and top-notch customer support. Some brokers will also offer one-on-one training, live webinars and real-world seminars.
Demo Accounts
All brokers will offer a demo account. It is important for beginner Forex traders to have a demo account that will not expire, so you can be completely comfortable with the market and the trading platform before you start trading with your own money.
Swap-Free (Islamic) Accounts
Islamic accounts, or swap-free accounts, are an optional trading account type that allows Forex traders to be compliant with the principles of Sharia law. In Sharia law, interest is prohibited, so swap-free accounts do not pay or earn overnight interest (rollover fees) on open positions.
Managed Accounts
Some brokers will operate a managed account for you, but this is rare. There are independent money managers who can manage your account while they are trading for themselves. It is vital that you read our article on managed accounts and understand the minimum deposit requirements and additional risks involved when trading CFDs.
FAQs
What is the best Forex broker in Malaysia?
The best brokers in Malaysia are FXTM, OctaFX and BDSwiss. FXTM is trusted by thousands of traders across Malaysia and has a great range of account types. OctaFX has a wide variety of trading platforms for clients, and BDSwiss has a leading reliable source of market research for planning trades.
I am a beginner trader, what should I look for in a broker?
As a beginner trader, choose a broker with an unlimited demo account, as this will give you the opportunity to practice before making a deposit. Limited demo accounts usually expire after 1-3 weeks, which is not enough time to learn how to profit from CFD trading.
Beginner traders should get educational support when starting, and each broker varies significantly in what material they provide. The minimum you should accept is some general videos and articles, but some brokers have invested in creating small trading universities that include video material as well as live webinars hosted by experts.
Each of our reviews has a section on the educational content to help beginner traders decide the best path forward.
Which is the best Forex brokers for beginners?
The Forex broker for beginners is XTB. Customer service is available 24/7 with both one-on-one mentoring and dedicated account managers provided for new traders. Educational material is excellent and is presented via XTB’s Trading Academy, which is both well-structured and clear. Finally, minimum deposit requirements are low, and spreads are tight.
How do you trade Forex in Malaysia?
To trade Forex in Malaysia you will need a trustworthy Forex broker, which you can find here at TradeForexSA. Before you start trading, you should open a demo account with the broker so you can gain experience with the Forex market and with the broker’s trading platform. Once you have gained enough experience you will need to deposit funds with the broker via bank transfer or a payment system like Ozow or Neteller. Once your live account is funded, you will be able to start trading.
Is Forex trading legal in Malaysia?
Yes, Forex trading is legal in Malaysia and you can trade with any Forex broker in the world.
How do I know I can trust a Forex broker?
Four things should be considered when determining if a broker may be trusted – regulation, trade execution method, client funds management, and industry recognition of their achievements.
The more major regulators the broker group is regulated by, the more oversight the group has. The number of regulators overseeing their processes gives a strong indication of the level of trust the government regulatory agencies have in them.
The execution method of trades is another component because if the broker profits from your loss – as is the case with market maker brokers – this can be seen as making the broker less trustworthy.
This is more of a concern if fewer major regulators regulate a market maker. Therefore, a heavily regulated market maker is considered more reputable than one with lesser regulation. It is noteworthy that some market makers have strong reputations and lots of client resources.
Most regulators require strict processes to keep client funds safe. This process includes placing client funds in segregated accounts at major banks in the local jurisdiction. Segregated bank accounts that are audited every evening means that client funds are protected against any bankruptcy.
Industry awards are given to brokers from journalists, financial watchdog organisations and their peers. While it can be argued that these award ceremonies are biased, they remain the best gauge industry recognition.
Do brokers trade against you?
If the broker is a market maker, then they are the market and will be trading against you by being the counterparty to your trade to create the liquidity you need. Since a vast majority of trades by retail traders are lost, a market maker is making money in most client trades. DMA brokers do not have any conflict of interest and do not trade against you.
How do brokers make money?
Market Makers will make money only from the spread – the difference between the buying and selling price of the currency pair. Since a Market Maker will become the counterparty to any trade, they will also make money when clients lose trades.
DMA brokers will make money from a tight spread and a commission, which is calculated on a per lot amount.
How to deposit with a broker?
Each broker is going to have different deposit methods, but all will have a deposit by credit/debit card and bank transfer option. Most brokers will also accept Neteller or Skrill, which are favoured by many traders because deposits and withdrawals are instant and usually free.
Some will accept regional payment methods, but local deposit methods have not yet been adopted in Malaysia. On occasion, brokers will accept Bitcoin deposits, and PayPal in addition to standard currency.
Which broker should I choose?
Traders have different requirements of Forex brokers, and thus there is no single best choice. This is how we compare them, and we offer insight into your choices. At the top of this article, there is a list of those that we believe are the best brokers for traders based on their reputation, platform, trading conditions and resources available to beginners.
How can I report scam brokers?
If you believe you have been scammed by your broker, the first thing to do is warn others and tell your story. We have a report a scam broker form which we use to gather information so that we get the word out. If you have been scammed, please complete the form.
Forex Risk Disclaimer
Trading Forex and CFDs is not suitable for all investors as it carries a high degree of risk to your capital: 75-90% of retail investors lose money trading these products.
Forex and CFD transactions involve high risk due to the following factors: Over-leveraging, unpredictable market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection for clients.
Traders should not deposit any money that is not disposable. Regardless of how much research you have done, or how confident you are in your trade, there is always a substantial risk of loss. (Learn more from the FCA or from ASIC)
Our Methodology
Our State of the Market Report and Broker Directory are the result of extensive research on over 100 Forex brokers. The explicit goal of these resources is to help traders find the best Malaysian Forex brokers – and steer them away from the worst ones – with the benefit of accurate and up-to-date information.
With over 150 data points on each broker and over 3000 hours of research and review writing, we believe we have succeeded in our goal.
In a world where trading conditions and customer support can vary based on where you live, our broker reviews focus on the local trader and give you information about these brokers from a Malaysian perspective.
All research has been conducted by our in-house team of researchers and writers, gathering information from various company representatives, websites and by sifting through the fine print. Learn more about how we rank brokers.
4.33
Accepts Malaysian Clients. Minimum spread EUR/USD 1.50 pips on trading account with lowest minimum deposit. Islamic account available. MT4 & MT5 platforms supported. Leverage offered can vary depending on country of residence, and your trading knowledge and experience. FXTM is regulated by CySEC, FCA, FSCA, and the FSC.
