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BROKERS
FX
Trading Platform response in our poll could mean a couple of things, whether a broker offers a popular trading platform such as MT4 or whether the trading platform has the (advanced?) specific features traders seek.
Of course, spreads refers to a broker offering tight spreads which translate to a low cost of trading. Customer service is important because very oſten it is hard to reach broker representatives to solve trading issues. Interestingly, the issue whether a broker has a dealing desk or not is not what traders think as the most important characteristic of an FX broker. Some brokers base their whole marketing pitch around the fact that they are ECN or that they don’t have a dealing desk. It seems that on this issue, it is as the French say, ca m’est egal! Perhaps to the dismay of regulators, being a regulated broker is not one of the four critical factors. Te first column in the table above displays the percentage of voters that selected each response. I thought it would be interesting to show in the second column what broker was most oſten mentioned among people who selected each attribute. I should clarify that even if a broker
is a leader in one attribute it does not necessarily make them the most popular broker overall . . .
Putting these results in perspective …
Most traders have multiple factors that are important to them, not just one. When we make a broker selection, we do look at multiple factors. As a result, the table above helps us catch a glimpse of “the” most important trait to a large group of people in the industry. But it does not necessarily tell us what is important and what isn’t, nor does it tell us how we select a broker. Having polled traders for three years in multiple categories, I have seen situations where people rank a broker a 10 in five categories, or a 10 in the overall category and a 5 in the other four categories. Most oſten though a broker gets a numeric ranking around 7 (plus or minus 1-2 points) in all categories. I think we as a trading community have a predominant broker factor that is most critical to us. Because a broker has that critical factor we are willing to forgive imperfections in other areas. Now, switching gears, I would like to add a geographic dimension to these
findings. Before I venture into making regional comparisons, I will establish what is the normal geographic distribution of retail currency traders. Using the voting percentages from the various continents over the past three years, it seems pretty clear that FX traders originate from: Americas 35%, Asia 30%, Europe 21%, Africa 9%, and Oceania 5%.
Having said this, I should add a BIG caveat: this is the distribution of English-speaking retail Forex traders – next year we will hopefully have meaningful sentiment data from large non-English audiences as well. For this particular poll (what is the most important characteristic . . .) there was a heavier-than-normal concentration of American and African voters, while a smaller representation of Asian voters: America 39%, Asia 22%, Europe 19%, Africa 17%, Oceania 3%.
For voters in the Americas, the most important broker characteristic was Trade Execution, and it was selected by 28% of Americans polled. The second most important characteristic was Spreads, with 20% of the vote. In third place was a tie between
FX TRADER MAGAZINE July - September 2010 11
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