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Rating Forex Brokers Formula v4.0

For e x R a t i ng For m ul a

“Introducing a Rating Revolution in the Financial

Forex Rating Formula v4.0
-Copyright © March 2014
George Protonotarios ©-All rights reserved worldwide
Distribution by Qexpert.com

“A Revolutionary Way of Rating Financial Services”

-TABLE OF CONTENTS(1) Introduction to the Series of Rating
- The Need for an Objective Rating Framework
- The Rating Formulas History

(2) Designing the Rating Formula v4.0

- The Core Rating Mechanism of Rating Formula v4.0

(3) Factor-1 Safety of Funds (Weight 26%)
(4) Factor-2 Trading Cost (Weight 28%)
(5) Factor-3 Trading Options (Weight 26%)
(6) Factor-1 Technology (Weight 20%)
(7) Rating Popular Brokers -Rating Results
(8) The Rating Formula v3.5 for Binary
Option Brokers

Forex Rating Formula v4.0 – Qexpert.com


(1) Introduction to the Series of Rating
Formulas by TradingCenter.org
Mission: “Seeking for an Objective Framework to Rate the World's Financial

The Current Problem with Online Ratings
Until today, all financial ratings were made by users (user ratings).
Unfortunately, and according to research, more than half (50%) of these user
ratings proved fake. And that is because there is a huge commercial incentive
for any financial company to hire outsiders in order to rate them favorably
and / or rate other competitors unfavorably. Evidence comes from the fact
that most of these user ratings are given excessive values (i.e. 5/5 or 0/5). Of
course, if you are very experienced with Forex reviews, you may understand
which of these user ratings are real and which not. The problem is that the
Total User Rating found in the internet today is the Average Rating Value of
usually many thousands of individual ratings, and evaluate them one by one
is nearly impossible and not accurate. Additionally, the new era of Web
Robots will make real user ratings / reviews even more rare and difficult to
The Motive of Financial Companies for Manipulating their Ratings
Favorable ratings attract more accounts on behalf of a financial company so
there is an important motive for them to hire somebody to do that job. Of
course many companies wouldn’t get involved with fake ratings, but the
problem is that we don’t know these ‘good’ companies. Even if we knew these
‘good’ companies -their competitors could still manipulate their overall ratings.
If we take into account all these factors we may conclude that the current
status of the user ratings in the Financial Industry is not acceptable at all, and
shows the potential to become even worse in the future.

The Need for an Objective Rating Framework
The series of Rating Formulas introduced by TradingCenter.org aims to solve
that problem once and for all by providing an objective framework of rating
financial services. This brand new way of rating allows adjustments in order
to adapt the special needs of each trader, while it is focusing on all beginners,
advanced and professional traders. The idea behind the rating formula is
simple while its implementation is based on a 4-factor mathematical model.
Each factor represents an important need for almost all traders:
Forex Rating Formula v4.0 – Qexpert.com


-1- Safety of Funds
-2- Low Cost of Transactions
-3- Wide Variety of Trading Options
-4- Technological Efficiency

Objective: “Be Safe, Pay Low Transaction Cost and use State-ofthe-Art-Trading Technology”
The Rating Brokers Formulas History
The first, the second and the fourth version of the Rating Formula are applied
on Forex Brokers. The versions 3.0 and 3.5 are applied on Binary Option
This is the Rating Formulas history and links with detailed analysis:
► Forex Brokers Rating Formula –V.4.0 at TradingCenter.org (in this eBook too)
► Binary Option Brokers Formula -V.3.5, at BinaryValue.com
► Binary Option Brokers Formula -V.3.0, at BinaryValue.com
► Forex Broker Rating Formula –V.2.0, at TradingCenter.org
► Forex Broker Rating Formula –V.1.0, at OnlineForex.Biz

Forex Rating Formula v4.0 – Qexpert.com


(2) Designing the Rating Formula v4.0
“Seeking for the Perfect Forex Broker”

The Core Rating Mechanism of Rating Formula v4.0
The Trading Center’s Rating Formula is based on what makes a Broker the
best choice for the average trader. A certain weight is given in each factor
while the sum is kept at 100% (maximum rating):
(1) Safety of Funds (26%) (Level of Regulation, Years in the Market,
Headquarters Base etc)
(2) Transaction Cost (28%) (Trading Commissions, Spreads on Majors,
Maintenance Fees etc)
(3) Variety of Trading Options (26%) (Forex Asset Index, Fund Methods,
Rebate, Leverage etc)
(4) Technological Efficiency (20%) (Platforms, Mobile Trading, MT4,
Automated Trading, Slippage etc)

Here is the Complete Analysis of all the 4 factors -forming altogether a Rating
of 100%.

Trading Sites by Qexpert.com:
► Forex-Rebates.com | ►W hat-is-Forex.com | ► ForexAutomatic.com

Forex Rating Formula v4.0 – Qexpert.com


(3) Safety of Funds, (Weight 26%)

The Importance of Regulated Companies
All Financial companies (investment firms, venture capitals, brokers, dealers)
tend to accept more risk than they can really afford. This is happening when
the Potential Profit of a corporate decision is larger than the incorporated risk.
So historically, financial companies tend to accept high levels of risk and that
exposes them to a high possibility of collapse. This is exactly what happened
during the financial crisis of 2007-2008 in the US and after in the rest of the
world. But if you are an investor you don’t care about your broker’s potential
profit, you only care about the level of the risk that he tends to accepts. Risk
affects directly the safety of investing funds. Financial companies maintaining
their corporate risk low and ensuring the safety of their client funds are rated
favorably. The version v.4.0 along with regulation, headquarters base and the
years in the market consist new parameters such is the existence of
Segregated / Client Bank Accounts.
Table: Safety of Funds Analysis



FSC (BVI) = 1.0%, | CYSEC =
3.0%, | FFMS = 3.0%, | RAFMM =
3.0%, | CBI = 4.0%, | ASIC =
4.0%, | FSC (NZ) = 4.0%, | FSA

1.1 Regulatory Bodies

(UK) = 6.0%, | BAFIN = 6.0%, |


NFA = 6.0%, | CFTC = 6.0%, |
FINMA = 8.0% | and MiFID =
General Offshore = 0%, Cyprus,
Israel, Latvia = 2.0%, Ireland,
Spain, Italy, Belgium = 3%,
1.2 Headquarters Base

Canada, Australia, New Zeeland =


4.0%, USA, UK, Germany,
Scandinavian Counties, France,
Switzerland = 5.0%
0-1 Years = 0 %, 2-5 Years = 2.0
1.3 Foundation (Years in the market)

%, 5-10 Years = 4.0 %, 10+ Years


= 5.0 %

Forex Rating Formula v4.0 – Qexpert.com


1.4 Segregated / Bank Accounts
1.5 Web Ratings (Used for differentiating results)



Yes = 2.0 %, No = 0.0 %


ForexPeaceArmy Rating = 1.0 %, |
EarnForex Rating = 1.0 %



Adjustment of Factor-1 by keeping

the Overall Rating at maximum 26
More than 1 Million Active Traders

1.6.1 Size Factor

= +1.0 %, No = o%



1.1 Regulation, (12%) -Rating Method: Accumulation
High regulation by a trusty authority can reduce the risk of your brokerage
partner to misbehave. Furthermore in developing countries market
supervisors control Forex Brokerage Companies and impose them with high
penalties if they are proven to operate in a risky or unfavorable way.
Regulation by authorities in offshore countries on the other hand can not be
fully trusted. Regulation is an important issue for all trading styles and that is
how it is treated by the rating formula (12%).

1.2 Headquarters Base, (5%) -Rating Method: Selection
The country where a brokerage company is based determines in a high
extend the reliability of its balance sheet. Fees and penalties imposed by
supervising authorities provide a strong incentive for Forex Brokers to operate
legitimately without risking their client funds. In addition, when we rate
countries as a headquarters base we take into consideration also their overall
macroeconomic profile.

1.3 Years in the Market, (5%) -Rating Method: Selection
The long existence of a Forex company in the market
company operates under a successful business model and
capable of managing enterprising risk over time. Time
concerns the financial industry.
Forex Rating Formula v4.0 – Qexpert.com

means that this
that it is proven
is important as


1.4 Segregated Bank Accounts, (2%) -Rating Method:
Brokers keeping client funds in segregated bank accounts are welcomed and
are rated favorably by the rating formula. Transparency is an important issue
when many transactions take place.

1.5 Web Ratings, (2%) -Rating Method: Accumulation
This rating parameter is used in order to differentiate the overall results. Two
popular ratings are used: ForexPeaceArmy ratings and EarnForex ratings.
These kinds of ratings are made by users. Sometimes user-ratings are fake
and that is why this particular factor receives weight of just 2% and not
Tip: “Differentiation is Power when your Industry is the Financials”

1.6 +Adjustments
Adjustments are made in the computation of all the 4 factors incorporated in
the new Rating Formula v.4.0. Note that even and after the adjustment
made, the Factor-1 rating remains at a maximum weight of 26%.
1.6.1 Company Size, (+1%) -Rating Method: Adjustment
In the computation of the Factor-1, the adjustment made concerns the size of
the broker. Large brokers tend to fall harder than others, and thus those
brokers with a client base larger than 1 million active traders, are rated
Note: In future versions it is possible that direct data from the balance sheet
of Forex brokers will be extracted and rated. And that means information
such is the annual profitability and / or the exposure in corporate debt as a
proportion of annual revenues. For now, we prefer to rate only aspects of
Funds Safety that offer us the chance to collect all the necessary data reliably.

i) A Forex Broker based in the UK that was founded in the year 2000 and that
is regulated by FSA and BaFIN, receives 22.0%. Now, if this broker offers
segregated bank accounts and receives web ratings of 1%, gets an additional
3.0%, Grand Total of 25.0%%.
Forex Rating Formula v4.0 – Qexpert.com


ii) A Forex Broker based in British Virginia Islands that was found in 2010 and
that it is regulated by FSC (BVI) receives 6.0%. Now, if this broker doesn’t
offer segregated bank accounts and receives web ratings of 1%, it gets a
Grand Total of 7.0%.
The difference between these two brokerage ratings is huge (18.0%), as
huge is the risk that you will accept if you choose broker (ii).

Forex Rating Formula v4.0 – Qexpert.com


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