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[Basics] [Basics] What is a broker? A checklist for picking one
A broker is the company that executes your orders and holds your money. With FX/CFD brokers, which country regulates them varies a lot from company to company.
How brokers make money
- Spread: the gap between the buy and sell price
- Commission: a separate fee per trade (ECN/RAW accounts)
- Swap: interest charged when you hold a position overnight
- Some brokers take the other side of client orders (market makers), so client losses can become company profit
Rough regulation tiers
- Strong: UK FCA, Australia ASIC, Cyprus CySEC and similar. Strict client money segregation and leverage limits
- Medium: South Africa FSCA, Dubai DFSA and similar
- Weak (offshore): St Vincent, Seychelles, Mauritius and similar. High leverage, but little protection in a dispute
- The same brand often signs international clients up under its offshore entity. Always check which entity your contract is with
Checklist before choosing
- Did you search the entity name and license number directly on the regulator's website?
- Are withdrawals fast and cheap? (The most common complaint in reviews)
- What is the real cost — average spread plus commission — on what you'll trade (e.g. gold)?
- How large are swaps? (Matters for strategies that hold for days)
- At what % are margin call and stop-out?
- Does it allow the EA or copy service you plan to use?
Switching brokers is a hassle. The surest test is to deposit a small amount, trade, and complete one withdrawal before adding more.
