Broker Comparisons & Ranking Methodology

TheTradingBible.com is a financial education website founded with the sole intent of providing beautiful, simple, reliable and high quality financial information. A big part of this effort lies in educating our audience on how brokers really work and how to differentiate good ones from bad ones as this can be a defining factor in the financial experience of anyone.

What we evaluate

Below you’ll find a table with our carefully chosen categories to evaluate brokers along their respective weights:

Please allow us to walk you through our logical reasoning for the weight of each point:

Safety

Safety weighs 30% because it doesn’t matter if a broker has the best platforms in the world, no spreads, no commissions and 50,000 assets. If it’s not safe, it’s the equivalent of a tasty plate of food made with poison. It looks pretty but you can’t eat it.

Platforms, Fees & Trading Conditions

Platforms, fees and trading conditions represent 50% of the weight as here is where a broker's quality will be truly measured for a user. Does a user get the right type of trading orders? Does the user get competitive fees? Great proprietary platforms?

Available Assets

Available assets have a mere weight of 10% for the following reason: If the broker is good (meaning that he has a great safety score, and amazing platforms, fees and trading conditions) then it’s not that relevant that its asset offering is small. For us this means that whatever little they offer, they’re doing it correctly, so any user can end up having 3 brokers if needed to get the perfect conditions for the assets he desires to trade.

Research and Educational Tools

Research and Educational tools are worth together the small figure of 10% (5% each). The reason for this is that we are currently in the year 2021 and TradingView took over the space in terms of research, nobody uses their broker anymore for such purpose.

When it comes to education, online academies, blogs and websites are the ones leading the competition. In reality, you don’t need a broker to teach you how to trade, you need a broker that does exactly what it's meant to do, be a good broker.

Now that you’ve got a good understanding of how we think, let’s discuss a few of our categories to show you how we actually measure them starting by: safety.

TTBTrust - Our brand new safety scoring system

TTBTrust is our brand new proprietary scoring system to measure how safe a broker is based on the following parameters:

• Regulatory license value (refers to the quality of the license itself thanks to the regulatory institution’s reputation to enforce correct behaviour)
• Time since licenses were granted
• Legal actions (lawsuits, etc) against the broker
• Potential rebrandings in the past
• Country’s AML risk score
• Is the broker a publicly traded company and if so on which exchange?
• What are the user's opinions in famous web portals such as trustpilot, reddit, quora, forexpeacearmy?
• Quality of the content on the broker’s website (such as appropriate info, risk warnings and disclaimers)
• Does the broker implement aggressive sales or retention strategies through the use of customer support departments to pressure clients?

Now, let’s go into a few details about our logic behind TTBTrust.

If a broker is regulated and licensed by BaFin (Germany) and ASIC (Australia) then why do they need a “license” from St.Vincent and the Grenadines?

There are 3 possible reasons:

• Global reach without regulatory restrictions to onboard more customers
• Reduced taxation
• Illicit Activity

It’s up to us to dig deeper into each broker to understand their true intentions and why they chose the legal framework they decided to choose.

Using our industry knowledge and experience we’re able to grade licenses using a 1 to 10 scale, then when combining the weighted metrics of all other parameters we’re able to produce a safety score for each broker.

Platforms, Fees & Trading Conditions

The majority our data points are measured with a binary score combined with an opinion score with variable weights, here are 2 examples:

Trading orders example

• If a broker provides Buy-Stop trading orders, the binary score will either be a 1 (if it exists) or a 0 (if it doesn't).
• How good is the Buy-Stop order will also be judged on a scale from 1 to 10 by analysing: how easy is it to place the order? Are the parameters clear? Is it hard to reach the order placement panel? Are the buttons clearly showing the type of order?

Then once we have both scores (binary and opinion score) we weight for this particular case as follows:

• 20% binary score
• 80% opinion score

The reason we give such an importance to the opinion score is that it’s nice to have a Buy-Stop order, but if it's complete garbage, hard to use and only confuses users then it shouldn’t be a positive point but it should rather reduce your average score.

Asset offering example

• If a broker offers 10,000 CFDs on stocks and another broker offers 7,000 real stocks, which one is the best choice?

To solve this problem, we took a 2-step approach, first, we assumed that a healthy quantity of average maximum stocks per broker should be around 10,000.

Now, in order to prevent that a broker that offers 10,000 CFDs on stocks beats a broker that offers 7,000 real stocks, we decided to give a point reduction when all assets of a broker are exclusively CFDs on the whole asset’s average. Also for the particular case of stocks and ETFs we implemented a -3 points reduction in our 1 to 10 scale.

Now, when we assemble a broker’s total asset offering score, we give more weight to stocks, forex and ETFs instead of cryptocurrencies. This is because cryptocurrencies are meant to be traded on cryptocurrency exchanges, that’s their whole point.

As you can see, we tried using our industry acquired knowledge and logic to try and come with the best results possible.

Our current standing

At this precise point in time, our database is made of 40 global leading brokers. It’s needless to say that the bigger the database the better and time is our only restraint as we currently don’t have all the possible broker choices.

Every day we’re building partnerships and trying to establish contact with the best in class brokers to add them to our comparisons and rankings.

Rest assured we’re every day trying to add new brokers and to objectively determine the best possible choices for our audience.

Conclusion

We’re a new brand in the broker comparisons space and we’re learning as fast as we can while implementing our innovative ideas to improve upon the great work that others have built.

Comparing and ranking brokerage firms is a difficult task. Sometimes it even feels like comparing pears to oranges as they’re both fruits, but they’re completely different and one is not better than the other one, they’re just a different taste.

Our objective with this whole project is to ensure that our users get pointed in the right direction when it comes to choosing a broker that actually serves their needs for exactly what they wanted while keeping them as safe as possible.

If you have any suggestions to improve our methodology or there is a broker you think that must be in our rankings, please feel free to get in touch with us via: