WikiFX Tested Forex Brokers Against Recent Market Changes

The beginning of August saw 2 incidents that significantly affected the forex market: The US Federal Reserve announced to cut the interest rate by 25 basis points, lowering the target range of interest rate to between 2% and 2.25%. Meanwhile, the US Labor Department released Julys Nonfarm Payroll (NFP), and the figure increased by 164,000, slightly lower than the previous forecast of 165,000. The releasing of NFP and interest-rate cut stirred up the forex market, causing mixed feelings among investors. During such a time of volatility, WikiFX conducted a massive trial trade among 94 forex brokers and after analyzing and comparing their trading speed and slippage, listed the top 20 brokers. The result of this experiment presents investors the competence of each broker and helps them gain a comprehensive view.

To better understand how the release of NFP and the Federal Reserve‘s lowering of interest rates significantly affect the forex market, let’s first look at some background information.

NFP, or Nonfarm Payroll, is the employment data released by US Labor Department on the first Friday every month. This is a crucial indicator of the economic trend in the US: it allows the global market to follow the employment situation in the US, and the employment statistics help the world to predict general economic trends in the US; NFP also reflects the country‘s overall consumption level to a large extent, as it is closely related to the average household income. Since US dollar plays a crucial role in the major currency pairs on the forex market, any rising or falling trend of US economy, indicated by the NFP, will cause considerable fluctuation of the forex market. So it’s always a major focus for both the market and investors.

Meanwhile, Federal Reserve‘s interest rate cut by 25 basis points had been another heated topic of the forex circle. The institution claimed the move aims to shield US economy from a slowing global economy and threats of the escalating trade tension. The interest-rate reduction, though in line with market expectation, wasn’t met with positive response. Moreover, the ambiguous attitude of Federal Reserve Chair Jerome H. Powell on whether a further cut will happen had disappointed investors, stock market and the government. The change inspired risk-hedging sentiments among investors and caused depreciation of currencies in other countries, leading to great forex market fluctuation.

After these statistics were released, many investors try to grasp the opportunities in a volatile forex market and make profits by trading on forex platforms. Therefore, WikiFX tested 94 brokers against the market after the NFP release and ranked the top 20 brokers in terms of their slippage and trading speed.

The top four brokers on the list all managed to keep their average slippage below 0.1, which was quite remarkable. But investors must note that AISA, ranking no.4, is unregulated and has great risks. And although the average slippage of other listed brokers were all below 0.3, investors need to beware of some low rating brokers which, despite their low slippage, are flawed in regulation and licenses and bear significant risks.

Slippage is an important factor that investors look at when choosing a broker. Theoretically speaking, brokers with lower slippage has a more favorable trading environment. The usual causes of slippage include network delay, a change in the bid/ask spread during a time of high market volatility, or manipulation of the broker. The release of NFP leads to significant market fluctuation, so the trial-trading results during this period largely reflect the competence of brokers and offer investors a good reference.

Turning to average trading speed (order execution speed), most of the tested brokers showed swift response. The top 3 brokers on the list all executed orders within 200 milliseconds, among which OWM, the champion of the list, traded with a remarkable speed of 179 milliseconds per order. Again, several low-rating brokers appeared on the list: AISA, BENEFOREX, EB have no regulation, while AxiTrader and TigerWit have received heavy investor complaints. Investors should be careful about these brokers with considerable risks.

As the saying goes, “true blue will never stain”. The brokers that excelled in trading speed and low slippage despite a volatile market after interest-rate cut and NFP release have demonstrated their strength, and WikiFXs trial-trading test has set a benchmark for the competence of brokers, and investors can use the test result as a reference, while taking into account relevant information like regulation and compliance, to choose the broker that suits them best. Detail information of all the brokers listed are available on both WikiFX website and App, investors may check that to gain a more comprehensive view of these brokers.

Given that US dollar is central to most forex trading and thus enjoys an incomparable status on the forex market, the economic statistics of the US is always an attention spotlight, with NFP and Federal Reserve interest rates being two most influential economic indicators. WikiFX will keep a close watch of them as well as other major indicators and perform more trial-trading of brokers to offer investors more valuable information.