The ever increasing number of MetaTrader Forex Brokers that you can use for your automated trading tends to spark a lot of debate as to the best broker to trade with.
Some brokers of course are better than others. The truth is that while the platform supplied will be the same, the dealing conditions offered by the broker will vary greatly. This unfortunately you won’t know about until you start to trade with them.
Most peoples choice of broker is going to be influenced by their personal requirements. These include the number of accounts you want to open, the amount of deposit and importantly the expert advisor strategies you intend to trade. It is therefore possible that you may decide to make use of multiple accounts and split these between brokers depending upon the strategy used.
Either way the good thing is that you can now open an online Forex broker account quickly and easily and start trading with just a small deposit.
Recommended MT4 Brokers
The following MT4 brokers are being used across our live Forex robot tests and on my personal accounts.
They are easily accessible with straightforward account opening procedures and have fulfilled the needs we have placed on them.
||$1 (micro) $25 (std)||Open Live
Points To Consider When Choosing a Broker
Below I have covered some points to consider when selecting your MetaTrader broker. These are aimed at providing you with some basic understanding of what to look for in a broker.
Spreads can play an important part in many automated strategies. In particular scalping strategies benefit from low spreads on the pairs traded.
As a general rule the spreads offered by MT4 brokers will be the same as other platforms. In addition you will find the usual choice of fixed or floating offered by the broker. Variable spreads will tend to be lower on average but bear in mind this headline figure can be a little misleading.
When market liquidity drops (i.e. the number of buyers and sellers there are less buyers and sellers in the market) it is common for a broker to raise the spread. A typical example of this is over the Asian market session. As many scalping robots target this window for their strategy it pays to keep an eye on the actual spreads that you are getting from your broker at this time.
Most MetaTrader Forex brokers offer free demo trading accounts. These provide the opportunity to run a strategy under live market conditions. They key benefit here is that you can benchmark a system without the need to deposit any funds. However there are a few caveats that you need to be aware of.
The first is that most MetaTrader Forex brokers will only grant you access to an account for around 30 days. After this time the account will be closed and you will then be pursued by the broker to open a live trading account.
The second is that not all brokers offer the same trading conditions on demo accounts as they do on live. With many brokers the spread will be better under demo conditions than they offer on their live account equivalents. This can make a big difference to the performance that you see from a system and is the reason why so many strategies fail to make the successful transition to live trading.
For this reason I prefer to make use of small dollar live accounts for testing such as those provided by FXOpen. These offer a low cost way of testing an EA against real market conditions.
Account leverage is used to allow you to control a proportionally larger amount of money in the market than you would be able to by your deposit alone. An easy way to think of this is that with a leverage of 1:100, your broker will allow you to control units of currency for just one unit in your account deposit.
What you really need to know however is that leverage increases risk. While you can make higher profits using leverage when the market is on your side, you can also hit severely hit if the market turns.
Most MT4 brokers will provide you with an initial 1:100 leverage which you can subsequently adjust if required. Always remember that there are two sides to leverage so don’t get too hung up on chasing the highest available.
Mini and Micro Accounts
It is now possible to open both Mini and Micro lot accounts with many MetaTrader brokers. With a Mini account 1 lot is equivalent to 10,000 USD. Therefore in order to control 10,000 USD in the market you would risk only $50 with a leverage of 200:1. For a Micro account 1 lot would be equal to $1,000 meaning you would risk only $5.
These account types allow you to balance your risks and make it possible to trade a balanced strategy on a low deposit account. This enables you to open accounts and trade a balanced strategy from just a few hundred dollars. This makes them a cheap and more reliable testing alternative for any new robots you are evaluating.
If you are thinking of using a robot to trade a large account then it is thoroughly recommend that you consider using a regulated broker. Operating under the watchful eye of the regulator helps to ensure that the broker sticks to agreed standards when operating with their clients as well as offering your deposited funds some degree of financial protection in the event that the broker goes bust.
Client funds are required to be held in segregated accounts with these brokers and their financial activities are closely monitored on a regular basis by the regulator.
When picking a regulated broker it is best to make sure that it is regulated by an authority that is close to your own location. Although there have not too much precedence for what happens when a broker goes to the wall, the assumption is that it will be easier to get your funds returned if you are located in the same jurisdiction as the broker operates in.
However while much is made of using regulated MetaTrader brokers, the truth is that if you are only using your MetaTrader account for trading with small sums or are running a low deposit live test on a strategy then this is probably not going to be too much of an issue.
There are several unregulated brokers on the market that offer good trading conditions and are well respected by their traders. These often have low deposit requirements and flexible online interfaces which make it easy to open and trade multiple accounts.
Funding Your Account
The majority of MetaTrader 4 brokers offer accounts denominated in US dollars (USD). You will however find a few that will let you operate your account in other major currencies. EUR,GBP and JPY tend to the next most offered although you will of course be narrowing down your choice of broker the more specific your requirements become.
The online operation of these brokers means that most will accept instant deposits online. This also means that there are generally a wide range of deposit options on offer. Nearly all brokers bank cards, credit cards and bank wire transfers for deposits while many support the use of additional payment methods including Pay Pal, e-Bullion, Western Union etc. If you require a specific method of funding your account then be sure to check directly with the broker to see the current range of payment options that they support.