Forex brokerage firms are needed by all traders, whether they are retail traders or small institutional traders. In order to move closer to the major market participants - banks, mutual funds, hedge funds, large investment firms - the larger you become. 75% of the global forex market capitalization is accounted for by banks. Some banks can act as brokers themselves. The remaining 25% is accounted for by individuals and small trading firms.

Forex broker selection is a dynamic process, depending on several factors, including the following:

A forex broker that is regulated or unregulated.

Trading for your own money or managing other people's money is what stage you are at in your trading career.

The amount of your trading capital.

The services of a particular forex broker that meet your trading requirements.

The tax implications of opening a trading account with a broker based in the U.S., U.K., Switzerland, or a tax haven country like Hong Kong, Singapore, British Virgin Islands, Bermuda, Cyprus, etc.

A new leverage of 50:1 (the old one was 100:1) imposed on U.S. based forex brokers on October 18, 2010 has already affected traders with accounts with them.

It is voluntary rather than compulsory for brokers to become regulated in the forex market. Brokers who choose to become regulated hope to attract more clients. Your funds are certainly more safe when they are deposited with a regulated best forex brokers. The details of this issue are discussed in the section 'Safety of Your Funds'.

Whether you're a new forex trader or exploring the possibility of a forex trading career, there are many brokerage firms available to you today. This is probably a stage in which you are testing the waters. You may want to deposit a few hundred or thousand dollars. However, this is a relatively small amount of money. You are most concerned about the safety of your funds when you advance in your trading career, as tens of thousands or even hundreds of thousands or millions of dollars are large sums of money.

Individual traders and trading firms may, on the other hand, seek to minimize tax expenses by opening accounts with a broker domiciled in a particular country. At this point in time, the U.K. and Switzerland are likely to be popular choices because these countries are tax havens as well as having well established regulatory bodies for the forex market. Anguilla, the Bahamas, Barbados, Bermuda, the British Virgin Islands, Cyprus, etc., as well as Panama, the Russian Federation, Costa Rica, might not have such well-established regulatory bodies. A growing number of forex brokers are setting up offices in Hong Kong and Singapore to offer their clients a better regulatory reputation and tax advantages.

As a result of the collapse of large and well-established financial institutions like Lehman Brothers (U.S.), Northern Rock (U.K.), Kaupthing, Glitnir, Landsbanki (Iceland), and other smaller financial institutions around the world, other financial markets, including forex, have been affected. A prime example is the fact that, in October 2010, the National Futures Association (NFA) in the U.S. imposed new leverage rates of 50:1 for major currency pairs and 20:1 for cross pairs from the standard 100:1 to retail clients of all forex brokers domiciled in the U.S. Brokers outside the U.S. are not affected. Regardless of how you look at it, it doesn't necessarily mean a positive or negative development! There are always better opportunities arising from the changes for a minority of successful traders, while the majority of losers complain about the changes constantly.