There are many tips on how to choose a Forex broker on the Internet, but most of them have general recommendations and are not comparable with practice. Most of the recommendations are written either by theorists or those who, for one reason or another, are promoting their brokerage company. On the classic mistakes of choosing a broker and on what criteria are of paramount importance, read on.
Criteria for choosing the best Forex broker
The classic mistake of a novice trader is a superficial assessment of a broker based on common criteria and unfounded trust in what they write about the company. Therefore, we start with the most common mistakes of new traders.
Criteria that are least trusted:
- Regulation and date of foundation of the broker. For a trader with several thousand dollars. The name of the regulator is absolutely useless for several reasons:
- All regulators are offshore or European. This means that in case of problems, the trader will have to prove his case in a jurisdiction other than the CIS. Sending documents, receiving statements from a European bank, etc. – All this for time and financial costs is not worth the effort. Chargeback will be more effective;
- regulators do not consider single claims;
- There are examples where the license did not save traders from broker’s bankruptcy.
The date of establishment of the broker is not a criterion of reliability. On the contrary, over the years of its existence, a broker could learn to deceive traders even more professionally.
- Reviews. To write a professional review for a copywriter is a matter of 10 minutes. There is a service to remove negative reviews, but it is easier to agree with the site itself, where these reviews are posted. How to distinguish a customized review from a real one:
- Check out the review by the anti-plagiarism program. If the same review is from different brokers or written with a gap of several weeks – it is customized. If the review is written from different persons – most likely customized;
- the lack of dialogue suggests that the responses are most likely not real;
- lack of specifics (account number and type, specific numbers, information about the dialogue with the support service) is a sign of a custom review.
And you can not exactly trust the ratings that are created for specific brokers. Please note that there is no public information about the number of clients and the annual turnover of any broker anywhere.
- Promotions and bonuses. Broker earns on the spread. Low spreads, various enticing stocks are a sign that the broker is pursuing an aggressive marketing policy and is not trying to attract customers with a quality service.
How to choose a forex broker:
- Offer. Trading conditions on the broker’s site are not always an offer and the most interesting moments are written in it. The contract itself can be hidden deep on the site and be public (effective from the moment of deposit replenishment). In the offer we pay attention to:
- detailed conditions for the execution of orders;
- commission (for turnover, for not using the account, for transferring the position to the next day, etc.);
- trade restrictions and order cancellation orders (transaction results) unilaterally;
- complaints procedure;
- stop out level.
- Verification. If at the time of withdrawal of money from the trader there is no identity document in accordance with the broker’s order, then you can forget about the earnings and the deposit itself.
- Lawsuits. If the broker has a representative office in the country of the trader, then in case of problems, claims are inevitable. You can find them in open public registries. A vivid example is a series of lawsuits and court claims against one of the TOP brokers.
There are many details on how to choose a Forex broker. Be careful and do not trust without analysis everything that you see on the Internet!