Rating Formula v5.0 – Rating Forex Brokers by Three (3) Different Trading Styles
“The most advanced Rating Formula ever built by TradingCenter”
✨ Preface: The Need for a 100% Objective Rating Framework
The Rating Formulas developed by Giorgos Protonotarios and TradingCenter.org introduce a new way of evaluating financial services. Today, most broker ratings found online are based on user reviews. Research shows that more than 50% of these reviews are fake. Brokers often have strong incentives to pay for fake positive reviews or negative ones against their competitors.
This series of Rating Formulas aims to solve that problem by offering a 100% objective framework for evaluating brokers. So far, two categories of financial services have been rated: Forex Brokers and Binary Options Brokers. The new Rating Formula v5.0 is specifically designed for Forex Brokers, featuring several important innovations.
🆕 What’s New in Version 5.0 of the Rating Formula:
(i) The number of core rating factors has been reduced to three focused categories to improve clarity and relevance:
1. Safety of Funds
2. Transaction Cost
3. Trading Options & Technology
(ii) Version 5.0 puts more weight than ever on transaction cost (40%) and introduces new rating elements, including SWAP charges and Stop Levels.
(iii) What sets version 5.0 apart is that, for the first time, it delivers ratings based on three different trading styles: Intraday Traders, Swing Traders, and Long-Term Traders.
(iv) The formula now produces four separate rating values:
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One for each trading style (Intraday, Swing, Long-Term)
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One Overall Rating, calculated as the average of the three.
(v) The first rating factor—Safety of Funds—is common to all trading styles. However, the other two factors—Transaction Cost and Trading Options & Technology—are calculated separately for each style. This makes the ratings more precise and better aligned with the needs of different types of traders.
For example:
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SWAP charges matter a lot to long-term traders but are irrelevant to intraday traders.
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Slippage and Stop Order Distance are crucial for intraday traders but have little impact on long-term traders, who trade infrequently and leave wider stop-loss margins.
Rating Formulas History:
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📌 Rating Formula v4.0 for Rating Forex Brokers | » Forex Rating Formula 4 (TradingCenter.org) 📌 Rating Formula v3.5 for Rating Binary Options Brokers | » Rating Formula V.3.5 (TradingCenter.org) 📌 Rating Formula v2.0 for Rating Forex Brokers | » Rating Formula 2 (TradingCenter.org) 📌 Rating Formula v1.0 for Rating Forex Brokers | (OnlineForex.Biz) |
- Rating Formula Mission: “Ensure Fund Safety, Minimize Transaction Costs, and Use State-of-the-Art Technology”
⚙️ The Core Mechanism Behind Rating Formula v5.0
The Rating Formula series is built to identify what makes a broker the best choice for the average trader. Version v5.0 takes this further by recognizing three (3) main types of traders, based on their trading time frame:
(a) Intraday Traders (Trading within the same day)
(b) Swing Traders (Holding trades for 2–10 days)
(c) Long-Term Traders (Holding trades for 1–6 months)
The average rating from these three categories forms each broker’s Overall Rating.
Three (3) Rating Categories and Their Weight (%)
The algorithm behind Rating Formula v5.0 consists of the following three core factors:
(1) Safety of Deposited Funds (25%)
Includes: Regulation level, years in operation, use of segregated bank accounts, country of headquarters, and other key stability indicators.
(2) Transaction Cost & Related Factors (40%)
Includes: Spreads and commissions, maintenance and withdrawal fees, SWAP charges, execution slippage, and similar cost-related elements.
(3) Variety of Trading Options & Technology (35%)
Includes: Range of trading platforms, mobile and API trading, automated trading capabilities, asset index, funding methods, leverage offered, bonus policy, and more.
Here is a breakdown of all three categories, which together form a maximum rating of 100%.
-1- Safety of Deposited Funds, Weight 25.0%
All financial companies—including investment firms, venture capital groups, hedge funds, brokers, and dealers—tend to take on more risk than they can realistically afford. This often happens when the potential profit of a corporate decision appears greater than the actual risk involved. Historically, financial firms have accepted high levels of risk, exposing both themselves and their clients to a significant chance of failure. This is exactly what occurred during the 2007–2008 financial crisis in the United States.
As an investor, you're not concerned with your broker’s potential profits—you care about the level of risk they are willing to take. Brokers that keep their corporate risk low and actively protect client funds are rated more favorably by the Rating Formula.
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Rating Factor-1 (Safety of Funds) is shared across all trading styles, because protecting your deposited capital is critical—regardless of your trading strategy or time frame.
Table: Safety of Funds Rating Analysis
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1. SAFETY OF DEPOSITED FUNDS |
25.0% |
FACTOR-1 RATING WEIGHT |
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SHORT |
SWING |
LONG |
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ANALYSIS |
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1.1 Regulation |
10.00% |
FSC (BVI) = 1.0%, | CYSEC = 3.0%, | FFMS = 3.0%, | RAFMM = 3.0%, | CBI = 4.0%, | ASIC = 4.0%, | FSC (NZ) = 4.0%, | FSA (UK) = 6.0%, | FCA (UK)=6.0% | BAFIN = 6.0%, | FSA JAPAN = 6.0% | CFTC = 6.0%, | FINMA = 8.0% | and MiFID = +2.0% |
Strict regulation is essential for any financial company |
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1.2 Headquarters Country |
5.00% |
General Offshore = 0%, Cyprus, Greece, Israel, Latvia = 2.0%, Ireland, Spain, Italy, Belgium = 3.0%, Canada, Australia, New Zeeland = 4.0%, USA, UK, Germany, Scandinavian, France, Switzerland = 5.0% |
The country where a brokerage is based largely affects the reliability of its balance sheet. |
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1.3 Years of Operation |
5.00% |
0-1 Years = 0 %, 2-5 Years = 2.0 %, 5-10 Years = 4.0 %, 10+ Years = 5.0 % |
A Forex company’s long time in the market shows it has a successful business model and can manage business risks over time. |
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1.4 Segregated Client Bank Accounts |
4.00% |
Yes = 4.0 %, No = 0.0 % |
Transparency is crucial when many transactions occur. |
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1.5 Internet Ratings (Differentiating Results Usage) |
1.00% |
ForexPeaceArmy Rating = 0.5%, | EarnForex Rating = 0.5% |
This rating factor is used to distinguish the overall results. |
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1.6 (+) FACTOR (1) ADJUSTMENTS |
(+ADJUSTING) |
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1.6.1 Company Size Adjustment |
1.00% |
More than 1 Million Active Traders = +1.0 % |
Large companies often experience bigger drops than others. |
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-2- Trading Cost & Similar, Weight 40.0%
The cost of opening and maintaining trading positions is very important when investing online. That’s why Rating Factor-2 has the highest weight (40%). As time goes on and more Rating Formulas are introduced by TradingCenter, the Cost Rating is improved to cover every type of cost. Rating Formula v5.0 uses several separate tools to accurately measure Transaction Costs based on different trading styles. Intraday traders use a completely different approach compared to swing or long-term traders. For example, intraday traders are heavily influenced by spreads and commissions, while long-term traders are more affected by Swap charges and less by spreads or commissions. Different trading styles mean different trading needs—and that’s exactly what Rating Formula 5.0 is made to evaluate.
Table: Trading Cost Rating Analysis
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2. TRANSACTION COST |
40.0% |
FACTOR-2 RATING WEIGHT PER TRADING STYLE |
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SHORT |
SWING |
LONG |
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ANALYSIS |
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2.1 EURUSD Typical Spread |
8.00% |
6.00% |
3.00% |
<0.3 pip = 100%, | <0.4 pip = 95%, | < 0.5 pip = 90%, | <0.6 pip = 85% | <0.7 pip = 80%, | <0.8 pip = 70%, | <0.9 pip = 60% | <1.0 pip = 50%, | < 1.25 pip = 40%, | < 1.5 pip = 30%, | <1.75 pip = 20%, | <2.0 pip = 10%, | <2.5 pip = 5%, | >2.5 pip = 0% |
To rate spread size, the most popular Forex pairs are used: EUR/USD, GBP/USD, and USD/JPY. Filter: If the trading spread is over 5.0 pips, the 2.4 rating automatically receives a zero (0) value. This happens because a very high spread removes the benefit of no trading commissions. |
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2.2 GBPUSD Typical Spread |
5.00% |
4.00% |
2.00% |
< 0.70 pip = 100% | < 0.80 pip = 95% | < 0.9 pip = 90% | < 1.0 pip = 80%, | < 1.25 pip = 70%, | < 1.5 pip = 60%, | < 1.75 pip = 50%, | < 2.0 pip = 40%, | < 2.25 pip = 30%, | < 2.5 pip = 20% | < 2.75 pip = 10% | < 3.0 pip = 5% | > 3.0 pip = 0% |
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2.3 USDJPY Typical Spread |
5.00% |
4.00% |
2.00% |
< 0.70 pip = 100% | < 0.80 pip = 95% | < 0.9 pip = 90% | < 1.0 pip = 80%, | < 1.25 pip = 70%, | < 1.5 pip = 60%, | < 1.75 pip = 50%, | < 2.0 pip = 40%, | < 2.25 pip = 30%, | < 2.5 pip = 20% | < 2.75 pip = 10% | < 3.0 pip = 5% | > 3.0 pip = 0% |
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2.4 Commissions when Trading |
9.00% |
6.00% |
3.00% |
No Commissions = 100% | Commissions < $1 / lot = 90% | Commissions < $2 / lot = 80% | Commissions < $3 / lot = 60% | Commissions < $4 / lot = 40% | Commissions < $5 / lot = 30% | Commissions < $6 / lot = 20% | Commissions < $7 / lot = 10% | Higher Commissions = 0% |
Brokers that charge low commissions are rated more favorably. Filter: A filter was added to 2.4: If trading commissions on this rating are very high (more than $20 per lot traded), then the 2.1, 2.2, and 2.3 ratings are set to zero (0). This happens because very high commissions cancel out the benefit of low or zero spreads offered by a Forex broker. |
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2.5 Slippage in Execution |
4.00% |
1.00% |
0.00% |
Slippage < 0.5 pip = 100% | Slippage < 0.75 pip = 90% | Slippage < 1 pip = 80% | Slippage < 1.25 pip = 70% | Slippage < 1.5 pip = 50% | Slippage < 1.75 pip = 30% | Slippage < 2.0 pip = 10% | Slippage > 2.0 pip = 0% |
Execution delays and re-quotes are definitely some of the biggest challenges for short-term traders. |
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2.6 Stop Order Minimum Distance (in pips) |
4.00% |
1.00% |
0.00% |
Stop-Loss Distance < 2.0 pip = 100% | <3.0 pip = 80% | <4.0 pip = 60% | <5.0 pip = 40% | <6.0 pip = 20% | <7.0 pip = 10% | >7.0 pip = 0% |
Anyone who trades intraday knows that the minimum stop-order distance can be the difference between winning and losing. |
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2.7 SWAP Charges |
0.00% |
10.00% |
20.00% |
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Very important for long-term traders and also for swing traders. |
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EURUSD SWAP |
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5.00% |
10.00% |
Long/Short EURUSD |
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GBPUSD SWAP |
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2.50% |
5.00% |
Long/Short GBPUSD |
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USDJPY SWAP |
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2.50% |
5.00% |
Long/Short USDJPY |
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2.8 Maintenance or Inactive Fees |
0.00% |
3.00% |
5.00% |
No = 100 %, | Yes = 0 % |
Some brokers charge maintenance fees and commissions on inactive accounts, adding extra costs for long-term traders. |
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2.9 Deposit or Withdrawal Commissions |
2.00% |
No = 2.0%, | Yes = 0 %, | 1-Free / Month = 1.0% |
Withdrawal and deposit fees reduce trading funds, so they are included in the rating. |
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FACTOR (2) ADJUSTMENTS |
(+ADJUSTING) |
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2.10 Order Execution |
2.00% |
1.00% |
0.00% |
ECN = 100% / STP = 75% | Market Makers = +0.0% |
The type of order execution is very important for short-term traders because it affects slippage and spread size. |
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2.11 Interest on Funds |
0.00% |
1.00% |
2.00% |
Yes = 100%, No = 0.0 % |
This is a valuable account option for long-term traders, but unfortunately, only a few Forex brokers offer it. |
-3- Trading Options & Technology, Weight 35.0%
Having enough trading options and access to advanced technology is also very important for anyone trading online. Good technology makes investing easier and more profitable. In addition, a financial company that invests in technology today shows it has a long-term vision and a customer-focused mindset. Just like in Factor-2, Rating Factor-3 includes different evaluation criteria based on the three trading styles. Each trading style has different needs when it comes to available options and technology. For example, allowing scalping and automated trading is very important for intraday traders but not useful for long-term traders. On the other hand, long-term traders care more about having a wide range of assets to take advantage of interest rate differences, while intraday traders usually focus on just three currency pairs: EURUSD, GBPUSD, and USDJPY. These pairs are the most liquid and usually have the lowest spreads, which is why intraday traders specialize in them.
Table: Trading Options & Technology
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3. TRADING OPTIONS & TECHNOLOGY |
35.0% |
FACTOR-3 RATING WEIGHT |
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TRADING OPTIONS |
SHORT |
SWING |
LONG |
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ANALYSIS |
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3.1 Forex Asset Index |
2.00% |
8.00% |
16.00% |
60+ Currency Pairs = 100% | 55+ Currency Pairs = 90% | 50+ Currency Pairs = 80%, | 40+ Currency Pairs = 70% | 35+ Currency Pairs = 60% | 30+ Currency Pairs = 50% | 25+ Currency Pairs = 40% | 20+ Currency Pairs = 30% | 15+ Currency Pairs = 20%, | 10+ Currency Pairs = 10%, | Less than 10 pairs = 0% |
The more currency assets available, the greater the chances for traders to find opportunities in the Forex market. |
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3.2 CFD / Futures Trading |
2.00% |
CFD / Futures Trading = 2.0 % | Only Mteals on Spot = 1.0 % | Nothing = 0% |
A wider variety of trading instruments like CFDs shows a Forex company is working to expand its services and meet more customer needs. |
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3.3 Demo Account |
2.00% |
Yes = 2.0 %, No = 0.0 % |
Having demo accounts helps traders make the right choices without wasting valuable time. |
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3.4 Fund / Deposit Methods |
2.50% |
For each deposit method available = 0,5%, max = 5 methods |
The more deposit methods a broker offers, the better they can meet their customers’ needs. |
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3.5 Fund / Withdrawal Methods |
2.50% |
For each withdrawal method available = 0,5%, max = 5 methods |
Offering a variety of withdrawal methods is equally important. |
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3.6 Minimum Deposit |
1.00% |
Min Deposit < $500 = +1%, | Min Deposit < $1,000 = 0.5% |
The smaller the minimum deposit, the easier it is for a trader to ‘test’ a Forex broker under real conditions. |
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3.7 Bonus (%) |
5.00% |
4.00% |
0.00% |
Bonus (Higher or Equal) >50% = Rating 100%, | Bonus >40% = Rating 80%, | Bonus >30% = Rating 60%%, | Bonus >20% = Rating 40%, | Bonus >15% = Rating 20%, | Bonus >10% = Rating 10% |
The higher the bonus offered, the more funds are available. |
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3.8 Leverage Rate |
3.00% |
2.00% |
1.00% |
(Higher or Equal) Leverage >100:1 = Rating 100%, | Leverage > 75:1 = Rating 50%% | Leverage >50:1 = Rating 25% |
The amount of capital leverage gives Forex traders extra power, which is why it is an important factor. |
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(+) ADJUSTMENTS |
(+ADJUSTING) |
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3.9 Offering 100+ Currency Pairs |
0.00% |
0.50% |
1.00% |
Yes = 100% / No = 0 % |
Brokers that offer a wide currency index are rated more favorably. |
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3.10 Competitions / Championships |
1.00% |
0.50% |
0.00% |
Yes = 100% / No = 0 % |
Trading competitions (real or demo) can offer easy money for skilled traders. |
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TECHNOLOGY |
SHORT |
SWING |
LONG |
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ANALYSIS |
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3.11 Available Platforms |
4.00% |
4.00% |
2.00% |
Each Supported Platform = 20% Rating, max = 5 platforms |
A wide range of trading platforms gives traders more choices. |
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3.12 Automated Trading |
2.00% |
0.00% |
0.00% |
Yes = 100 % / No = 0 % |
The ability to receive signals from Expert Advisors (like ZuluTrade and Tradency's Mirror Trader) is an important feature for short-term traders. |
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3.13 MT4 / MT5 Availability |
2.00% |
2.00% |
1.00% |
Yes = 100% / No = 0 % |
MetaTrader is the clear standard in the Forex industry. |
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3.14 Mobile Trading |
2.00% |
1.00% |
1.00% |
Each Supported Device = 25% (iPhone, iPad, Android, Windows Mobile, Blackberry), max = 4 devices |
Mobile trading is not just a trend; it is the future of trading. |
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3.15 Scalping / Hedging Policy |
1.00% |
0.00% |
0.00% |
Yes both = 100% | Yes only Hedging or Scalping = 50% | No = 0 % |
The ability to scalp Forex currencies is an important feature for short-term traders. |
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3.16 Customer Service |
4.00% |
24/7 = 1.0%, | 24/6 = 0.5%, | 24/5 = 0%, | email = 1.0%, | Phone = 1.0%. | Live Chat = 1.0%, | Skype = 1.0%, | Call-Back = 0.5%, Max = 4.0% |
Online services need high-quality customer support. |
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3.17 (+) ADJUSTMENTS |
(+ADJUSTING) |
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3.18 PAMM / Managed Accounts |
0.50% |
MAM / PAMM Accounts = +0.5% | Simple Managed Accounts = +0.25%, | No = 0 % |
Managed accounts have become very popular, so we rate brokers that offer them favorably. |
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3.19 Swap-Free Accounts |
0.00% |
0.50% |
0.50% |
Yes = 100% / No = 0 % |
SWAP-Free (or Islamic) accounts offer an additional option for long-term traders. |
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3.20 API Trading |
0.50% |
0.00% |
0.00% |
Yes = 100% / No = 0 % |
The availability of API trading shows that a Forex broker focuses on advanced trading technology. |
📶 Calculating Overall Rating Results
Calculating Rating Values for Individual Styles
By adding the results of all Rating Factors (1, 2, and 3), we can find each broker’s Rating Value for each of the three trading style
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FORMULA v5.0 OVERALL RATING |
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Max Rating = 100.0% |
The Overall Rating Value for the Average Trader
The Overall Rating Value is the average of the three trading style ratings.
■ Overall Rating = (Intraday Rating Value + Swing Rating Value + Long Rating Value) ÷ 3
🔗 More: » Rating Formula 2 | » Rating Formula 4
🔗 Forex Broker Ratings at: » ForexExperts.net
■ Giorgos Protonotarios, Financial Analyst –Web Projects
Rating Brokers Formula © TradingCenter.org
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