OnlineForex.biz World Brokers Rating Formula (v1.0)
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After reviewing tens of Forex Brokers, and using a wide (15-year) trading experience OnlineForex.Biz rating brokerage formula is ready and revealed. Based on this formula, OnlineForex.Biz begun to rate the world’s major Forex Brokers and hopefully the most important Forex Brokers around the world will be covered soon.
Note:There is a version 5.0 of the Rating Formula found » here in Trading Center
Introducing OnlineForex.biz Rating Formula v.1.0 to the Web
The Formula is based on 4 trading characteristics:
◘ Company Reliability {28%}
Aiming security of funds and thus effective risk management on behalf of clients / traders.
◘ Competitiveness and Cost of Services {30%}
Aiming low cost transactions which maximize the profit potential in favor of the clients / traders.
◘ Trading Options {26%}
The magnitude of trading options makes trading more convenient and usually more profitable.
◘ Technology and Innovation {16%}
In every online application the technological factor is very important for security and no execution delays. Points are credited not only on technological aspects but in every other aspect that distinguish a certain company (i.e. Forex Broker) from competition.
History:
The first and the second versions of the Rating Broker Formula were applied on Online Forex Brokers. The versions 3.0 and 3.5 of the formula were applied on Binary Option Brokers. More information here:
» Forex Rating Formula –V.5.0 TradingCenter.org
» Forex Rating Formula –V.4.0 TradingCenter.org
» Binary Option Brokers Formula -V.3.5, BinaryValue.com
» Binary Option Brokers Formula -V.3.0, BinaryValue.com
» Forex Broker Rating Formula –V.2.0, TradingCenter.org
» Forex Broker Rating Formula –V.1.0, OnlineForex.Biz
This is the basic structure of formula v1.0
Now, let’s see an analysis of each of the 4 mentioned Rating Factors:
1. Reliability of the Forex Broker Company
Table: Reliability Weighing
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1. RELIABILITY
|
28%
|
1.1 Regulation |
12%
|
1.2 Headquarters |
5%
|
1.3 Found |
4%
|
1.4 US Residents |
2%
|
1.5 FPA Rating |
5%
|
Reliability and Credibility of a Broker is the most important issue for any kind of trading. So we gave extra weight on Regulation, Headquarters Base and Years in the market. Forex Brokerage Companies that are highly regulated can be seen as more secure for trading. A home base in country like UK or Switzerland means that the domestic legislation is strict and the possibilities that a Forex Broker will collapse are minimized. The number of years in the market means experience and a successful Business Model.
Table: Reliability Analysis
|
1. RELIABILITY
|
ANALYSIS
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1.1 Regulation |
FSC (BVI)=1, CYSEC=3, CBI=4, ASIC=4, BaFIN=5, FSA (UK)=6, MiFid=8
|
1.2 Headquarters |
Offshore=0, Cyprus=2, Ireland, Australia=4, USA, UK, Switzerland=5
|
1.3 Found |
0-2 Years=0, 2-4 Years =1, 5-7 Years=2, 7-10 Years=3, 10+ Years = 4
|
1.4 US Residents |
Yes=2 / No=0
|
1.5 FPA Rating |
Actual Forex Peace Army Rating (we use it for differentiating our results)
|
2. Forex Broker Competition Analysis
Table: Competition Weighing
|
2. COMPETITION
|
30%
|
2.1 Spread on EUR/USD |
12%
|
2.2 Commissions Charged |
8%
|
2.3 Deposit / Withdrawal Commissions |
2%
|
2.4 Leverage |
4%
|
2.5 Customer Service |
4%
|
Competition is the first thing that a common trader is seeking from a Forex Broker. The magnitude of the provided spread combined with the existence of trading commissions can define in a high extend the trading profit potential. Especially for day-traders or even scalpers a low spread is absolutely crucial. The high level of leverage also is operating in favor of traders while the quality of customer service upgrades the whole trading experience.
Table: Competition Analysis
|
2. COMPETITION
|
ANALYSIS
|
2.1 Spread on EUR/USD |
<0,5=12%, <0,75=10%, <1=8, <1,5 = 6, <2=4, <3=2, <4=1, >4=0
|
2.2 Commissions Charged |
No Commissions=8, Low Commissions=4, Medium Commissions=1
|
2.3 Deposit / Withdrawal Commissions |
Yes=0, No=2%
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2.4 Leverage |
400%+=4, 300%=3, 200%=2, 100%=1, <100%=0
|
2.5 Customer Service |
Live Chat=2, 24/7=2, 24/6=1, 24/5=0, Phone=1
|
3. Forex Broker Trading Options
Table: Trading Options Weighing
|
3. TRADING OPTIONS
|
26%
|
3.1 Availbale Assets |
10%
|
3.2 Bonus / Rebate |
8%
|
3.3 Scalping |
2%
|
3.4 Hedging |
1%
|
3.4 Deposit Methods |
2.50%
|
3.5 Withdrawal Methods |
2.50%
|
The number of available assets is an important issue for every trader. Of course there are many traders that care only to trade a particular Forex Currency Pair (like EUR/USD) or a certain commodity (usually Gold or Brent). For the purposes of our ratings we gave extra weight on the variety of offered assets as this is a sign of a well organized Forex Company which tries today to expand and adapt on more customer needs.
Table: Trading Options Analysis
|
3. TRADING OPTIONS
|
ANALYSIS
|
3.1 Availbale Assets |
Number of Currencies=8%, Commodities=1%, Stocks & Indices=1%
|
3.2 Bonus / Rebate |
10% Bonus/ Rebate=2, 15%=3, 20%=4, 25%=5 30%=6, 35%=7, 40%+=8
|
3.3 Scalping |
Yes=2 / No=0
|
3.4 Hedging |
Yes=1 / No=0
|
3.4 Deposit Methods |
For each method 0,5%, max=5
|
3.5 Withdrawal Methods |
For each method 0,5%, max=5
|
4. Forex Broker Technology / Innovation
Table: Technology Weighing
|
4. TECHNOLOGY
|
16%
|
4.1 Available Platforms |
5%
|
4.2 API Trading |
1%
|
4.3 Expert Advisors |
2%
|
4.4 Mobile Trading |
2%
|
4.5 MT4 / MT5 Availability |
1%
|
4.6 General Innovation |
5%
|
Technology plays a huge role when trading online. State-of-the-art trading technology provides traders with certain advantages (for example real-time prices, fast execution, avoiding delays in orders etc). Furtermore, the variety of trading platforms is a very important factor in our ratings. Also extra weight is given on available API and Expert Advisors capabilities which provide the chance for Automated Forex Trading. MT4/MT5 availability is also considered a pro for a broker as MetaTrader platform is almost a trading standard nowadays. Finally the level of the Forex Broker overall innovation is considered very important. Innovation may concern new trading tools, new techniques, simplicity on execution, unique technical analysis feautures etc. A Forex Broker that invests today to make his services more innovative means a broker with a long-term thinking and a customer based business philosophy. Both signs that this broker wants to stay in the market and thus he will protect his reputation and his clients interests.
Table: Technology Analysis
|
4. TECHNOLOGY
|
ANALYSIS
|
4.1 Available Platforms |
Each Platform=1%, max=5
|
4.2 API Trading |
Yes=1 / No=0
|
4.3 Expert Advisors |
Yes=2 / No=0
|
4.4 Mobile Trading |
Each Supported Device=0,5%, max=4
|
4.5 MT4 / MT5 Availability |
Yes=1 / No=0
|
4.6 General Innovation |
High Innovation=5%, Medium Innovation=2.5%
|
General Conclusion:
If we are able to measure real value in an industry then we are able to choose the best partners, and avoid scam. In the case of Forex Brokers, knowing your partners real value, may save you some funds.
■ Giorgos Protonotarios
Investment Consultant
Msc in “International Banking & Finance”
Note:
The formula presented in this article is not based only upon a trading experience but also upon a business planning experience including the appraisal of many middle-sized companies in several industries of the general economy.
Rating Results Published on OnlineForex.Biz
Note: All the following rating results was produced using the version 2.0 of the Rating Brokers Formula found »here in Trading Center.
OnlineForex.Biz Rating Formula in Action
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OnlineForex.biz
Forex Brokerage Rating Formula, 16th of August 2012
You are forbidden to reproduce, create derivative work, merge or translate the content that is published on OnlineForex.Biz
OnlineForex.biz
Forex Brokerage Rating Formula, 16th of August 2012
You are forbidden to reproduce, create derivative work, merge or translate the content that is published on OnlineForex.Biz
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