When you enter the Forex market, your main goal is to minimize your loss and maximize the profit. If you are an inexperienced trader, just armed with goodwill and enough saved money to start trading, you must not allow yourself to lose at the very beginning. Many newbies lose their capital from the very start just because they chose the wrong broker. Or so-called brokers. So, let’s see how to spot scammers and how to choose the right broker for you.
How to select a forex broker?
There are several main factors that you should take into account when selecting the broker. These are:
- Compliance with FCA regulations
- Customer Support
- Fees and commissions
- Opportunity to practice on a demo
Compliance with the FCA regulations
Brokers with a good reputation operate in accordance with the rules of the Financial Conduct Authority. They have a proven record of ethical trading and always make sure to work in their clients’ best interests. They don’t use the funds allocated to execute the client’s orders to cover the company’s expenses, which counts for fraudulent activity. Traders can trust the brokers listed on the FCA register since they have passed a strict screening process regarding their business. FCA regulated brokers may assure a significant level of protection.
The brokers that deserve your trust is the one that displays its contact detail transparently namely location, address, phone number, email address. They also have to ensure access to the terms and conditions to their clients before starting the trading. Also, the broker must be ready to assist their clients in case of any doubts and concerns.
Every honest broker should have at your disposal efficient customer support. The efficient support needs to answer your question in your native language on time and to be able to resolve your issues knowledgeably.
Fees and commissions
Depending on your trading plan and the initial budget, fees and commissions can play a crucial role. Check out what charges you may have and the way they are calculated. These can vary largely depending on the trading volumes and orders that you place. It’s essential to know there are no hidden fees that may occur if your account is inactive for a certain period. Also, check out the rollover fees applied if you prolong your trading position until the next delivery date.
Opportunity to use a demo
You have to train your trading skills before entrusting your money to the brokerage company. A demo account is an indispensable tool that allows you to explore new strategies and see what works the best for you as a trader. Along with this tool, the broker should give you the chance to look at the free learning material. However, some brokers offer paid courses to enable you to learn trading skills from basic to advanced. In most cases, they are worth the money you pay since the knowledge you will acquire is directly linked to your trading success.
How to avoid scams?
Scams put their traps all over the internet, and many people fall into them. They usually offer their ”recipes” for a quick profit on Forex, but neither doesn’t work.
Generally, they won’t offer you anything mentioned above. They play on your inexperience, therefore no demo accounts and free learning resources. Often, they try to sell the trading signals, which are 100 percent sure insider info that should help you to make the right trading decisions at the right moment. The thing is, they rarely provide their trading history that will ensure you in their success. When it comes to brokerage websites and platforms, always check if they operate legally. Check if they are on the list of regulated brokers. Make sure the spelling of the name of a company is correct. Beware that they often use names similar to regulated company names, playing on your lack of attention.