Choosing the Best Forex Broker: Everything You Need to Know
When it comes to Forex, there are a lot of questions a Forex trader might have when just starting out. The first one is this: do I need a broker and how to find a good one. Let’s determine who is a broker and which criteria to look at while choosing so that there are no unpleasant situations. Alpari decided to share their experience.
Who Are Brokers?
Brokers provide the opportunity to trade in financial markets. They are intermediaries between the trader and the market. Forex broker’s income is the commission, due to the difference in exchange rates of currencies during a transaction. Although the basics of Forex trading are pretty simple and not as complex compared to trading stocks on the market, it can still be a challenge for beginners. That is why choosing the right platform is the key to a successful and pleasant experience.
How to Determine If the Broker Is Reliable?
The market is full of Forex brokers to choose from. Unfortunately, not all of them are trustworthy. There are a lot of scam companies right now that scam their clients. Therefore, the first thing you need to do is to determine the key parameters for evaluating brokers. Here are the main factors you should look at:
Reputation and Reliability
A company a trader trusts his money with must be reliable. Despite all the great offers and high-income promises, if a chosen broker turns out to be a scammer, or just goes bankrupt, the user will not get his money back. In order to assess the degree of reliability of the company, you need to pay attention to the customer’s reviews. The real experience of real traders will help to understand how honest the company is and how favorable trading conditions are.
However, in no case should you trust the reviews posted on the websites of brokers themselves. Almost always, such reviews are written by company employees and they have little to do with reality. Moreover, only recent reviews from the last six-month period or a year should be taken into account, as earlier ones may not reveal the current position of the company.
It does not matter where the broker company is based: South Africa, Nigeria, the USA or any other country. Each Forex broker needs to have a license. The world finance community agrees that the presence of authoritative licenses is the most important criterion that determines the reliability of a broker. Ignoring this factor, you can get an extremely unpleasant surprise such as a loss of a deposit after a short time.
Everything is very simple. If a company does not have a license, then its activity is not controlled in any way and it is unknown whether this company actually exists. Luckily, there are many trustworthy brokers such as Alpari that operate with a license. Companies licensed by a reputable regulator strive to provide high-quality service and offer good trading conditions.
Of course, there is no guarantee that a company providing brokerage services for 9 years is more reliable than a company operating in the eighth or seventh year. However, this criterion is valid. We recommend you to be careful about Forex brokers who entered the market a couple of years ago. Even if such young companies offer highly favorable conditions, and even if well-known traders and financiers are among the founders, there is a risk that the project may fail and you will lose your earnings.
In this perspective, choosing the right broker may seem difficult and time-consuming at first. However, using our advice, the process will be quicker and you will be able to start making money with a good company right away.