Top Tips On How To Pick A Forex Broker

There are many Forex brokers vying for your potential business, as a simple Google search will show you. However, in recent years there have been many cases of scams and brokers who are more concerned with their profit than client service, so it behoves you to take care when picking a Forex broker to use.

One of the first things that you can check is where the broker is located and whether it is regulated by the appropriate government authorities in that country. The Internet makes using brokers from remote locations as easy as using local brokers, and this is not necessarily to be avoided. However, you have to realize that if a catastrophic situation arises, any legal remedies will be more difficult and expensive to pursue.

When the broker is regulated, it is easier to find more information about the company. How long has the company been in business, and what is the experience of the principals? There may have been issues in the past with either the company or its officers, and you should be able to trace these through the regulating authorities. Having a clean bill of health does not mean that the company will not collapse or commit fraud, but any identified problems will certainly serve as a warning to you.

Companies are required to provide a risk disclosure to every customer, and while much of this is standard, it should include the total number of accounts as well as figures on what percentage were profitable. If a company has a high percentage of losing customers that suggests something in their operation may not serve the trader's best interests.

Be aware that there are different ways in which brokers can operate. Some brokers offer a standard spread regardless of the time of day, and this means that they are "making the market", and in some cases may themselves be taking the other side of the trade from you. This is not a reason to reject them, but you should be aware of the way they are operating. In fact, standard spreads give you a way of easily comparing the costs involved with using different brokers.

The Internet is useful for many things, and you will find many reviews and user comments for every Forex broker. These should be treated with caution, if not suspicion. A lot of the reviews come from affiliate sites run by entrepreneurs who will receive a commission if you sign up on the basis of their recommendation, and therefore they are likely to declare "on balance" that the broker is worthwhile.

Forum comments can also be seeded by the broker himself or his rivals, and unless you know the commentator, you will be unable to tell if the comments can be trusted, whether favourable or unfavourable.

Before finally deciding, try out the broker to see if it suits you. Most online brokers will encourage you to open an unfunded demonstration account so you can test out their trading platform, and you can also test their response to customer service requests before committing your money.

at 1:54 AM
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