Does it make sense to open a trading account and invest your money in the deposit if you do not have any guarantees of its safety? Why carefully analyze price charts and study the fundamentals of the foreign exchange market if the profits we earn can be being taken away by fraudsters?
It all comes down to the reliability of a Forex broker, which is usually assessed by such criteria as credibility, work history, insurance of risks and liabilities, availability of a license and the possibility of legal conflict resolution.
1. Credibility
Authority in forex trading is a vague concept. However, to determine the credibility of a particular office, you can read reviews about this Forex broker. Naturally, broker’s site is not a good place to be looking for reviews, where only positive feedback is usually gathered and all kinds of certificates are placed, which is called “about us” section. It is better to look for more objective data on the specialized thematic forums.
2. Reputation
The duration of the work of the Forex broker and its happy history in the foreign exchange market speaks volumes about it stability and good risk management within this company.
3. Risk insurance
Insurance of risks and liabilities is the most important indicator capable of protecting the funds of a trader in the event of a company’s crash. Therefore, it is absolutely necessary to check insurance guarantees.
4. License
Licensing is a certain kind of guarantee about the honesty of the owners of the company. The bottom line is that licensing of brokers gives traders the opportunity to file complaints and claims to special bodies. Such control bodies exist in all developed countries. In the UK, for example, this role is performed by the FSA, the Financial Services Commission, in the USA – by the CFTC or the Commission for the Supervision of Goods and Futures. Unfortunately, in the CIS countries the work in the foreign exchange market is not really controlled by anyone.
5. Contract
Legal regulation of conflicts should be indicated in the contract for the provision of brokerage services. Therefore, it is necessary to carefully study the contracts. The failure to pay proper attention to it often leads to disastrous consequences.
6. Currency pairs
It is better to choose a broker that offers a wide range of currencies. If a broker offers a couple of major economic powers, two or three pairs of developing countries with floating currencies, three or four fixed or tied currencies, then such a proposal is much better than the simple offer of 12 pairs of advanced economies.
7. Customer Support
The software can generate errors. In case of occurrence of such or similar problems, the trader needs to ask customer support for help. Therefore, a professional and patient support staff can seriously help a trader increase profits or, on the contrary, unqualified technical support can cause a lot of troubles.
Pay attention to these 7 factors, and you will surely be able to select the broker you will be comfortable to work with.
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