- Regulation is a critical factor when choosing a broker. Make sure your broker is regulated by either the FCA, CySEC or ASIC.
FSCA regulation is also important as this means any complaints you have will be resolved through the South African legal system.
- Consider the different Account Types on offer at your broker, most brokers offer swap-free Islamic accounts, and some offer unlimited demo accounts to practice with.
- Think about whether you want a ZAR Account rather than a USD Account.
Not many brokers offer ZAR accounts, but they do save you money in conversion fees and guarantee that your money is deposited with a local bank.
- Choose a Trading Platform and find a broker that supports that platform.
MetaTrader 4 is a safe choice as it’s the industry standard and there is a multitude of online tutorials.
- Choose what Broker Type you want. Some brokers offer commission-free trading and are known as dealing desk brokers or market maker brokers. Some brokers charge commission but have tighter spreads, these are known as non-dealing desk brokers or direct market access brokers.
- Always check for additional Broker Fees that may be charged.
We always highlight these in our reviews, but common ones are deposit and withdrawal fees and currency conversion fees.
- Find a broker with the Trading Conditions that will support your trading strategy. Think about how much Leverage you want to have available; keeping it low (100:1 or less) is a good idea if you are still learning how to trade.
How To Choose A Forex Broker
Forex brokers should be measured by regulation, account options, platform choice, trading conditions, and beginner friendliness.
Regulators ensure that brokers have a fair trading environment and anti-money laundering processes, all the while operating strict auditing oversight and ensuring client fund protection. Brokers that are regulated by more than one major regulator are considered more trustworthy.
The major regulators are:
These international regulators are respected for their commitment to consumer protection, strong oversight and swift enforcement of sanctions on fraudulent brokers.
The South African regulator is called the Financial Services Conduct Authority (FSCA) and is the most credible regulator on the African continent.
A trustworthy broker should be regulated by at least one of the major regulators or the FSCA.
Our Most Popular Funded Trader Programs
Brokers that are regulated by more than one regulator are considered more reliable.
Be wary of brokers who are only regulated by small island states like St Vincent, Bermuda and the Cayman Islands. These regulatory agencies are not as well regarded as the major international regulators as they give more leniency to brokers and less coverage for traders.
Also, be cautious of brokers who have just moved to South Africa. With the recent tightening of European and Australian regulations, several questionable brokers have moved into South Africa recruiting for traders.
Each brokerage will have various account types, and there is a trend in the industry to have fewer account types available than in years past.
The primary distinction between account types is between the Live accounts, Demo accounts, and Swap-free accounts. Managed accounts are available, but rare.
These accounts use real money, and everything that you do in this type of account will affect your profit or loss.
These are accounts loaded with virtual money and do not expose a trader to any risk.
Pros and Cons of Becoming a Proprietary Trader
Demo accounts allow traders to test the trading platform, customer service, research area, and trading conditions before committing real money. Most demo accounts are time-limited but are easy to reactivate.
These are the best demo accounts.
Swap-Free (Islamic) Accounts
Islamic accounts, or swap-free accounts, are an optional trading account type which allows Forex traders to be compliant with the principles of Sharia law.
In Sharia law, interest on loans is prohibited, so swap-free accounts don’t earn overnight interest on open positions.
Select brokers will operate a managed account for you, but it 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.
Foreign currency (USD, EUR, GBP) or ZAR accounts?
Generally, having a ZAR account is a good thing; you will avoid any broker conversion fees and the currency conversions that banks and credit card companies charge when making a wire deposit or withdrawal.
Brokers with ZAR accounts usually use South African bank accounts, where withdrawals and deposits are much faster and often happen instantly.
How to Choose a Forex Broker
With a USD account at an international broker, this will not always be the case.
When it comes to choosing a broker to trade with, deciding on the right platform can make a substantial difference to a trading career.
That said, your broker should support a platform you are comfortable using.
While a minority of brokers have proprietary platforms, others use mainstream trading platforms like MetaTrader and cTrader.
MetaTrader 4 and 5 are the most common CFD trading platforms; however, MetaTrader’s older interface and complex setup make it less accessible to beginners. cTrader, on the other hand, has a more modern interface and is easier for beginner traders to set up.
If you are an experienced trader with a particular software choice in mind, or if you are a beginner seeking to learn more about platform options, we have put together a list of the best Forex trading platforms for traders and the brokers that support them.
All brokers have mobile trading apps, and some will have developed proprietary apps, but a vast majority rely on the MetaTrader software for IOS and Android.
Types of Forex Brokers
Forex brokers fall into two main categories – Direct Market Access (DMA) brokers and Market Maker brokers.
HOW IT WORKS
Each broker category can be split into two subcategories. DMA brokers are divided into subcategories called ECN and ECN/STP, and market makers can have a dealing desk (DD) where the broker can alter trades before they are executed.
Pure ECN Brokers
In the DMA category, a Pure ECN (or Electronic Communication Network) broker, will never interfere with your trade, and the only source of liquidity comes from other members of the network.
ECN execution will mean that if there is no liquidity in the market, your trade will have slippage, and you may get a requote.
Pure ECNs are entirely free of conflict of interest, but traders should expect requotes, and slower trade execution speeds.
The top ECNs brokers are:
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