Our Methodology: Forex Broker Rating System

FXSharp Review Methodology v3 is the mandatory research and verification protocol applied before every broker review. This page explains, step by step, how every data point and every numerical score on our broker reviews is calculated.

Methodology v3 was calibrated in May 2026 to replace the old two-tier regulator classification with a four-tier ladder. The previous binary "Tier-1 vs everything else" lumped Malaysia's Labuan FSA with paper-only registries like SVG and Marshall Islands. Real-world investor protection differs significantly between these jurisdictions, and the scoring now reflects that reality.

Scoring System (0-10 Scale)

Each broker is scored across six dimensions plus an overall composite. All scores are between 0.0 and 10.0 and rounded to one decimal place. Scores are not subjective, they are computed from the sum of the criteria below. If a criterion has no verified source, that criterion counts as 0, but the final dimension score is still emitted as a number (possibly 0.0) so the radar chart never has missing values.

v3 Design Principles

Neutral on market breadth, a single-jurisdiction Tier-1 broker (e.g. a US-only NFA/CFTC FCM) is not penalized for narrowness. Multi-jurisdictional gets a bonus; single is not punished.
Platform-agnostic, proprietary platforms (TWS, NinjaTrader, Webull, xStation) score equal to MT4/MT5. The MT-mandatory bias is removed.
Public-parent credit, a privately-held subsidiary of a publicly-listed audited parent (Moomoo → Futu Holdings, NinjaTrader → Kraken) receives the same business-transparency credit as a directly listed broker.
Enforcement nuance, small fines (under $2M total in 5 years) are noted but not catastrophic. Material fines (over $10M) hit hard. License revocation is fatal.
Four-tier regulator ladder, replaces the old binary system. Tier-1 = real protection (FSCS/SIPC compensation, segregation, enforcement). Tier-2 = strong framework with partial protection. Tier-3 = paper rules with weak enforcement and no compensation scheme. Tier-4 = paper-only registration with zero real oversight. Details below.
Target consensus, outputs land within ±1.5 points of established editorial consensus from independent benchmarks. Affiliate-driven sources are excluded from our calibration entirely.

Regulator Tier Ladder

Every license a broker discloses is classified into one of four tiers. Compensation funds (SIPC, FSCS, ICF, CIPF) are tracked separately, they are not licenses and do not contribute to license/regulation scoring (their effect appears in the Risk Control dimension instead).

Tier 1: Real Investor Protection

Compensation scheme + segregated funds + enforcement + dispute resolution. A broker with a Tier-1 license has actual legal recourse and meaningful protection against insolvency.

FCA, Financial Conduct Authority (United Kingdom)
SEC & FINRA, Securities oversight (United States)
CFTC & NFA, Futures oversight (United States)
ASIC, Australian Securities and Investments Commission
BaFin, Federal Financial Supervisory Authority (Germany)
FINMA, Swiss Financial Market Supervisory Authority
MAS, Monetary Authority of Singapore
JFSA, Japan Financial Services Agency
SFC, Securities and Futures Commission (Hong Kong)
CIRO / IIROC, Canadian Investment Regulatory Organization
FMA-NZ, Financial Markets Authority (New Zealand)
OSC & BCSC, Canadian provincial regulators

Tier 2: Strong Framework, Partial Protection

Real rules + AML/KYC + partial compensation (where applicable). Lighter coverage than Tier-1, but well-established regulatory infrastructure.

CySEC, Cyprus Securities and Exchange Commission (MiFID II framework, ICF up to €20,000 compensation)
DFSA, Dubai Financial Services Authority (DIFC zone)
FSCA, Financial Sector Conduct Authority (South Africa)
BMA, Bermuda Monetary Authority
FSC Mauritius, Financial Services Commission Mauritius
CMA Kenya, Capital Markets Authority Kenya
CIMA, Cayman Islands Monetary Authority

Tier 3: Paper Rules, Weak Enforcement

Capital requirements and AML rules exist on paper, but there is no investor compensation scheme and enforcement is minimal. Holding a Tier-3 license signals that the broker has made some regulatory effort, better than nothing, but it does not protect retail funds.

Labuan FSA, Labuan Financial Services Authority (Malaysia)
SCA UAE, Securities and Commodities Authority (UAE federal, outside DIFC)
Seychelles FSA
Belize FSC
BVI FSC, British Virgin Islands Financial Services Commission

Tier 4: Paper-Only Registration

These jurisdictions do not regulate forex meaningfully. Holding such a "license" is closer to a company registration than to financial oversight. The license is listed transparently in our reviews, but the score formula gives it 0 points.

SVG FSA, Saint Vincent and the Grenadines (their own statement says they do not regulate forex)
Marshall Islands Registrar, IBC registration only
Vanuatu FSC, rules exist on paper, enforcement is effectively zero
Saint Lucia Registrar of Companies, company registration only
Comoros / Mwali, notorious for shell licensing
Anjouan, Cook Islands, Niue, Dominica, Panama, Costa Rica, St Kitts & Nevis, Antigua, similar paper-only regimes

1. License Score (0-10)

Measures the quality and count of regulatory licenses a broker holds, plus documentation hygiene.

Tier-1 regulator count × 2.0 (capped at 8)
Tier-2 regulator count × 1.0 (capped at 3)
Tier-3 regulator count × 0.5 (capped at 1.5)
Tier-4 regulators: 0 points (listed transparently, but not credited)
Documentation complete (entity name + license number filled for every Tier-1/2/3 license, verifiable in the public register): +1
No regulator warning or revoked license in the last 5 years: +1
Enforcement adjustment (applied last, can be negative): total fines/settlements in 5 years under $500K → 0; $500K–$2M → −0.5; $2M–$10M → −1.5; over $10M → −3.0; active license revocation forces the entire license score to 0.
Floor 0, cap 10.

2. Business Score (0-10)

Measures company maturity, ownership transparency, and the verifiability of corporate structure.

Years operating: 25+ → 4.0, 15–24 → 3.5, 10–14 → 3.0, 5–9 → 2.0, 2–4 → 1.0, under 2 → 0.5.
Publicly listed on a major exchange (FTSE/NASDAQ/NYSE/ASX/HKEX/TSE): +2.5
Subsidiary of a publicly-listed parent (e.g. Moomoo via Futu Holdings on NASDAQ): +2.0, mutually exclusive with the listed-company line above.
Annual audited financials publicly available: +1.5
Ultimate ownership structure transparent (UBO disclosed): +1.0
Headquarters in a Tier-1 jurisdiction (US, UK, EU, AU, CA, JP, SG, CH, NZ): +1.0
Cap 10.

3. Software Score (0-10)

Measures platform diversity and quality across three independent buckets, then sums them.

Platform Bucket (max 4)

Award-winning proprietary platform (TWS, NinjaTrader, xStation, ProRealTime): +2.0
Generic proprietary platform: +1.0
MT4 supported: +1.0
MT5 supported: +1.0
cTrader: +1.0
TradingView integration: +1.0

Mobile + Access Bucket (max 3)

Mobile app rating ≥ 4.5 (App Store + Google Play average): +2.0; 4.0–4.5 → +1.0; 3.0–4.0 → +0.5.
Native iOS AND Android: +0.5
10+ language support: +0.5

Developer + Depth Bucket (max 3)

REST/FIX API or scripting language (NinjaScript, Pine Script, EA on MT): +1.0
Unlimited demo account: +1.0
Industry award (Finance Magnates, Investopedia best-of, etc.): +1.0

4. Risk Control Score (0-10)

Measures investor-fund safety and risk management. Compensation funds (SIPC, FSCS, ICF, CIPF) are credited here.

Negative balance protection on retail accounts (or N/A for US futures + CFTC customer-segregation): +2.5
Client funds segregated at top-tier banks: +2.0
Covered by FSCS / ICF / SIPC / CIPF or equivalent CFTC futures protection: +2.0
No insolvency/default in the last 5 years: +1.5
Stop-out level explicitly documented: +1.0
Risk warning + retail loss percentage publicly disclosed: +1.0
Cap 10.

5. Regulation Score (0-10)

Measures real investor protection, segregated funds, compensation schemes, enforcement, dispute resolution. Tier-3 jurisdictions earn only token credit here because they lack the protection layer, even if their paper rules exist.

Tier-1 regulator count × 2.0 (capped at 10)
Tier-2 regulator count × 0.75 (capped at 2.25)
Tier-3 regulator count × 0.25 (capped at 0.75), token credit only
Tier-4: 0 points
MiFID II compliant (EU or UK): +1.0
Dual US oversight (CFTC AND SEC, OR NFA AND FINRA): +1.0
Cap 10.

6. Influence Score (0-10)

Measures the broker's global or local market influence, operational reach, client volume, media presence.

Active licensed operations in 5+ countries: +3.0 (3–4 countries: +1.5)
1M+ active customers: +2.0 (500K–1M: +1.5; 100K–500K: +1.0)
Monthly trading volume disclosed and ≥ $100B: +2.0 ($10B–$100B: +1.0)
10+ Bloomberg/Reuters/FT mentions in 12 months: +1.5 (5–10: +1.0)
Tier-1 industry award (Finance Magnates, regulator-recognized): +1.5
Cap 10.

Letter grade mapping: 9.5–10 = A+, 9.0–9.49 = A, 8.0–8.99 = B+, 7.0–7.99 = B, 6.0–6.99 = C, below 6.0 = D.

Overall Composite Score (Weighted)

The overall score is computed from the six dimension scores using this weighted formula:

overall = regulation × 0.25 + license × 0.20 + risk_control × 0.20 + business × 0.15 + software × 0.10 + influence × 0.10

Rounded to one decimal place. Regulation and License together carry 45% of the overall score, reflecting our editorial position that regulatory protection is the single most important factor for retail traders.

What Changed in v3 (May 2026)

The old two-tier system (Tier-1 vs Tier-2) was replaced with a four-tier ladder. Brokers with only Saint Vincent / Marshall / Vanuatu / Saint Lucia paper licenses now correctly score 0 on License and Regulation, while Labuan / Seychelles / SCA UAE earn small but real credit.
SFC Hong Kong was added to Tier-1 (it was previously omitted by oversight).
License score Tier-2 multiplier raised from 0.5 to 1.0 (DFSA and BMA are close to Tier-1 quality and were under-credited).
Regulation score Tier-1 cap raised from 8 to 10 (so brokers with 5+ Tier-1 jurisdictions like Moomoo and Webull reach the genuine ceiling).
Documentation and "no warnings" bonuses now require at least one Tier-1/2/3 license. Tier-4-only brokers no longer receive these bonuses.
Compensation funds (SIPC, FSCS, ICF, CIPF) are now tracked separately and never confused with licenses.

Prop Trading Firm Methodology

Why prop firms need their own rubric. Proprietary trading firms (prop firms) are not brokers. They sell evaluation challenges, fund successful traders on demo accounts, and mirror results on a partner brokerage. Applying the broker rubric (Tier-1 license, compensation fund, segregated client money) produces invalid scores because prop firms structurally cannot hold those credentials. We score them on what actually matters to a prop trader: whether the firm pays out, whether the rulebook is fair, and how stable the drawdown terms are.

The Six Dimensions and Weights

Payout Reliability: 25%
Rule Fairness: 20%
Drawdown Terms: 15%
Business Maturity: 15%
Platforms and Sponsor Broker: 10%
Community Signal: 15%

1. Payout Reliability (25%)

The single most important dimension. We verify documented payouts through three independent channels: public payout proofs on the firm's official channels, trader-uploaded payout confirmations on Trustpilot and trader forums, and direct correspondence with traders willing to share redacted payout records.

A firm that processes payouts on demand, transparently, with no hidden withholding, scores 9 to 10. A firm with documented payout delays, account "audit holds" that systematically prevent payouts, or selective withholding after large profits scores 0 to 4. A firm that has refused to pay at scale (the FundingTicks 2026 retroactive-rule shutdown is the canonical worst case) scores 0 to 2 and triggers a regulator-warning indicator on its review card.

2. Rule Fairness (20%)

Most prop firm complaints trace to rules that exist in the small print but are never surfaced to the trader before the challenge fee is paid. We grade the rulebook on four checkpoints:

Consistency rule: is the best-day-vs-total-profit cap stated upfront in plain language and stable across tiers?
Max lot or scaling rule: does the firm cap position size in a way that prevents legitimate strategies from working?
News and event trading: is the restricted-window list published, or applied at discretion?
Strategy bans: are "no martingale", "no HFT", "no copy trading" enforced by clear definitions or by case-by-case judgment?

A rulebook where every restriction is published, defined, and applied consistently scores 8 to 10. A rulebook with retroactive changes, discretionary enforcement, or rules surfaced only after a payout request scores below 4.

3. Drawdown Terms (15%)

Drawdown is how prop firms manage their own risk and the single mechanic that fails accounts. We grade on clarity and stability, not on whether the numbers are loose:

Is the daily drawdown calculated from balance, equity, or end-of-day balance? Is the basis stated upfront?
Is the overall drawdown trailing or static, and at what point does it lock?
Has the firm changed drawdown rules on existing accounts after launch?

Tight but transparent drawdown (FTMO 5% daily, 10% overall, balance-based, never changed retroactively) scores 8 to 10. Loose but ambiguous drawdown ("equity determined at our discretion") scores below 5. Retroactive tightening scores 0 to 2.

4. Business Maturity (15%)

Same logic as the broker side, with prop-firm-specific signals:

Years operating under the same legal entity, not rebranded shells
Ownership transparency: named principals, registered company, disclosed jurisdiction
Audited financials or verifiable public payout volume
Press coverage in trader-focused publications, not paid placements

5. Platforms and Sponsor Broker (10%)

Prop firms cannot hold broker licenses, but they do hand actual order flow to a real broker. That sponsor broker's regulator is the closest thing to "regulation" a prop firm offers. We score on:

Is the sponsor broker disclosed by name?
Is the sponsor's regulator Tier-1 (FCA, ASIC, CFTC/NFA, CySEC, ESMA-equivalent)?
Are the supported trading platforms (MT4, MT5, cTrader, DXtrade, Match-Trader, TradeLocker, NinjaTrader, Tradovate) industry-standard or proprietary?
Does the firm offer multiple platforms or lock traders to a single terminal?

An undisclosed sponsor broker caps this dimension at 4 regardless of other factors. A disclosed sponsor with Tier-1 regulation plus multi-platform support scores 9 to 10.

6. Community Signal (15%)

Prop firms are smaller and younger than brokers, which makes mainstream press coverage rare and trader-community sentiment more reliable. We weight:

Trustpilot rating, with verified-purchase reviews and incentivized-review programs accounted for separately
Discord and Telegram community size, normalized to firm age
Subreddit (r/Daytrading, r/PropTrading) sentiment, read qualitatively rather than by raw score
Trader-forum threads on Forex Factory, BabyPips, and prop-specific communities

Verdict Bands

The composite score uses the same verbal bands as the broker rubric so readers do not have to learn two systems:

9.0 to 10.0: Excellent
8.0 to 8.9: Very Good
7.0 to 7.9: Good
5.0 to 6.9: Average
3.0 to 4.9: Risky
0.1 to 2.9: Avoid

What We Do Not Score on Prop Firms

To keep the rubric honest, we explicitly do not penalize prop firms for things they structurally cannot have:

No Tier-1 broker license required of the firm itself; the sponsor broker's license is the relevant signal (Dimension 5).
No compensation fund (FSCS, ICF, SIPC) required. Challenge fees are not deposits.
No segregated client money requirement. There are no client funds in the broker-protection sense.
No leverage cap penalty. Prop firms typically allow higher effective leverage than ESMA brokers, which is a feature for funded traders, not a risk to the trader's own capital.

Verification Standards

Editor research must include at least three independent sources before a prop firm review is published. The standard checks:

Firm's own published terms, FAQ, and rulebook (archive snapshot taken at review date)
Trustpilot reviews from the past 12 months, filtered for verified-purchase status
Trader forums and Discord servers, with editors taking screenshots of relevant payout or rule-dispute threads
Direct outreach to the firm's support for questions the public site does not answer (responses and non-responses both factor into Rule Fairness)

If three independent sources cannot be located for a given dimension, that dimension is marked unrated rather than guessed.

Editorial Independence

FXSharp accepts no payment from brokers or prop firms in exchange for higher scores. Affiliate links, where present, are clearly disclosed and never influence the methodology, score, or content of any review. Our editorial team applies the same rubric to every entity in its category regardless of commercial relationship: brokers are graded against the broker rubric, prop firms against the prop firm rubric, and the two are never mixed.