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74-89% of retail CFD accounts lose money.
74.34% of retail CFD accounts lose money.
74% of retail CFD accounts lose money.
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:
| Category | Weight |
|---|---|
| Safety | 30% |
| Platforms | 20% |
| Trading Conditions | 15% |
| Fees & Costs | 15% |
| Available Assets | 10% |
| Research Tools | 5% |
| Educational Tools | 5% |
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.
Platforms, Fees & Trading Conditions
The majority our data points are measured through a binary score combined with an opinion score using 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, not on traditional brokers.
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, 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.