How to choose a broker
Speculative trading on Forex and investments in stock exchange assets are supposed to be high-risk transactions. Avoid them if you do not have free rental capital and the necessary knowledge in the field of trading and risk management.
It is also critical to choose a reliable broker which meets your individual demands. The safety of your deposits and the ability to conduct exchange transactions will depend on your choice.
What is a Forex broker?
Only large players like banks or hedge funds can independently conclude transactions on the Forex market. The average investor is able to gain access to Forex trading through an intermediary.
A broker is a company that has the right to trade on Forex or stock exchange. Being an intermediary, it gives access to transactions through the trading terminal and executes the orders of its clients.
It is extremely important to choose the right brokerage company, because financial security, potential benefits and forex trading opportunities depend on it.
The primary factor of choice is the broker’s reliability and reputation. You should pay special attention to those factors to avoid scams and unscrupulous service providers.
Firstly, you should check the broker’s licenses and the company which issued them, which regulators control the work of the broker. Check in which country the company is registered and where it stores clients’ money – in your country or in offshore accounts. Make sure the broker is officially listed on the exchange and is supplying valid data.
Secondly, find out the expiration date of the broker and its website. Best thing if the broker has been providing services on the market for more than 10 years. Third, learn about risk insurance.
Another factor is the size of capitalization. The minimum capitalization requirements for brokers are different in different countries. If the broker is hiding information about capitalization it is a reason to be wary.
Check out several popular brokers yourself. In addition, visit independent sites with broker ratings, real reviews and recent comments from traders. Don’t trust ads.
Terms of cooperation
To start with, find out what software the brokerage company offers. You will enter into transactions through the trading terminal. Terminal and other software should be comfortable, modern and functional. In addition, it is essential to make sure the terminal is reliable and runs smoothly and without delays.
Check the available format of (DD or NDD). If we are talking about the DD format, the broker may have a conflict of interest with the trader, so in some cases it is better to choose brokers with the NDD orders’ execution format.
The broker makes money using spreads, swaps, commissions. The spread can be fixed or floating. The terms of commissions also differ depending on the broker.
Deposit requirements are another factor. Brokers set limits on the minimum deposit. Withdrawals are also subject to special conditions. Choose a broker with appropriate payment methods.
Novice traders should pay attention to brokers with demo mode trading options. The demo mode gives you the opportunity to get acquainted with the trading mechanisms without risking real money.
Tips for choosing
Don’t trust any ads you see. Due to the high competition in the brokerage market, many brokers use aggressive marketing. They provide not very reliable or misleading information.
Beware of scammers. There are many scams in the brokerage market. Check carefully the company you are transferring money to. If a broker offers too attractive options, large bonuses and a minimum spread – it should alert you. As well as any guarantees of profit.
Check independent ratings, real reviews, comments from traders on forums and social networks. Do not trust the reviews that are published on the website of brokerage companies. Make deposits taking into consideration the consequences and your financial capabilities.
Story by John Davis