Forex broker – an intermediary and a partner who opens the door to our trading career in the currency market.
Unfortunately, even the most favorable trading conditions on the platform should not blind us when choosing.
We have selected the essential characteristics that determine whether trading with a given broker will be safe.
Licenses and regulations
This is the most important foundation of security. The forex broker we plan to trade with must have the appropriate license. Oops, a mistake – it doesn’t have to be, but it’s worth picking one that has it :-).
Having this license first proves that the forex broker operates itself in accordance with applicable law and meets the formal and security conditions. It includes the correct transaction process as well the handling of our personal data with documents, etc. The monitoring itself is about making sure that everything is going smoothly.
Highly reliable regulations come from regions such as Switzerland (FINMA), EU Member States (ESMA), Australia (ASIC), United States (NFA), and Hong Kong (SEC).
You may have mixed feelings about Cypriot regulations. Tarnished public opinion after the IronFX scandal has left a bad taste. Since then, CySEC has made several key changes and has become downright ruthless to Forex brokers. It results in numerous penalties, suspended and revoked licenses, and a high frequency of inspections.
Traders’ opinion
When choosing a broker, an impeccable reputation, customer appreciation, and a strong brand are often good indicators. Positive feedback from reliable and, above all, experienced marketers is one of the best marketing sources. These people are generally up to date with the industry’s world situation, know what to look for when choosing a broker, record regular profits, and make payments.
However, beware of statements from anonymous and completely new users of forums that only praise one company.
You can always get a better picture of a particular company by reading Forex broker review.
Deposit guarantee
Government guarantees are another factor that increases our sense of security and trust in given institutions (or rather those that regulate the local market).
The funds are guaranteed as our security when the broker with whom we keep the funds suddenly decides to go bankrupt. Situations happen relatively rarely, but they do.
You don’t have to look very far, for example—January 15, 2015, and broker Alpari UK. A UK Guarantee Fund has been very effective in helping traders recover their funds.
The number of funds covered by the guarantee results from the regulations of a given country. It is a factor closely related to the previous paragraph on licensing.
Negative balance protection
“Negative Balance Protection” – this phrase is appearing more and more frequently in the advertising content of brokers. But is it sure that it gives us full protection against loss? Apparently yes.
Except it can turn out to be a double-edged sword. In extreme situations, the guarantee introduced can have a significant impact on the broker’s solvency. In such a situation, exceptions to the protection provided may begin.
The solution to all of these problems is to choose a forex broker as part of a larger package. That ensures that the parent company will back it up with appropriate capital in the event of financial problems. This will prevent any disruption in order fulfillment, payments, and loss of image.
In Conclusion
The process of choosing the broker must include a thorough checkup of the company. So when you refer to the lists of best brokers, continue with reading reviews and do your proper research for each broker that interests you. It’s always better to dedicate more time to this process than to trying to get your money back from scammers, isn’t it?
For more informative articles keep visiting Article Ritz.