How Do I know a Good Forex Broker? 2026

Before a trader loses money in the market, most lose it to the wrong broker.

In my 5 years as a forex trader, I’ve seen talented traders fail—not because they couldn’t analyze the market, but because they trusted brokers that were never meant to pay them. As a trader from Uganda, I understand how difficult it can be to verify brokers when options are limited and misinformation is everywhere.

This article is your complete checklist for identifying whether a forex broker is legitimate or a scam. If you follow this guide carefully, you’ll avoid 90% of broker-related losses before you even place a trade.

Check out best brokers I recommend for Beginner vs Professional traders

1. Regulation: The First and Most Important Check

A legit forex broker must be regulated.

Regulation means the broker is monitored, audited, and legally required to follow rules that protect traders’ funds.

Trusted regulators include:

FCA (United Kingdom)

ASIC (Australia)

CySEC (Europe)

FSCA (South Africa)

Important:
Never trust regulation claims on a broker’s website alone. Always:

Copy the license number
Visit the regulator’s official website
Confirm the broker’s name appears there

If you can’t verify it independently, assume the broker is unsafe.

Compare some selected brokers by Forexcastle

2. Segregation of Client Funds

Legit brokers keep client money separate from company funds.

Why this matters:

If the broker collapses, your money is protected
The broker cannot use your funds for operations
It prevents internal manipulation

Scam brokers mix funds, meaning once you deposit, your money is gone.

3. Real Trading Conditions vs Marketing Lies

Many scam brokers focus on:

Huge bonuses
“Risk-free” trades
Guaranteed profits

Legit brokers focus on:

Transparent spreads
Clear commission structures
Execution quality

If a broker promises profits, they are not a broker — they are a casino.

4. Withdrawal Test: The Ultimate Truth
Deposits are easy everywhere. Withdrawals reveal everything.
Red flags:
Endless verification requests
Delays without explanation
Pressure to “trade more” before withdrawing
Pro tip from experience:
Always test withdrawals early with small profits.

5. Customer Support Behavior

Legit brokers:

Respond clearly
Don’t pressure you
Answer technical questions honestly

Scam brokers:

Avoid direct answers
Push you to deposit more
Assign “account managers” who trade for you

6. Trading Platform Integrity

Serious brokers use:

MetaTrader 4
MetaTrader 5
cTrader

If a broker uses a custom unknown platform, be extremely cautious.

Forexcastle Verdict

Do not ruin your time learning the right things to do in the market and then land on a broker whose intentions are to draw money from you instead of giving a competitive trading environment.