The importance of the choice of brokerage company cannot be stressed enough. Especially today when we see the constant emergence of new online brokers.
Also, people are getting increasingly interested in currency trading during the last several years. And many of them enter the market clueless and without enough information.
That’s why you need to learn more about the reasons why choosing the right broker should be your top priority if you want to start trading on Forex.
Sorting the wheat from the chaff
There are many excellent and regulated brokers out there, but the chances you can stumble upon scammers also exist. Therefore you need to know how to make a difference between excellent and dishonest brokers. The licensing system operates for this purpose.
To have the right to operate in a specific jurisdiction, each broker must pass the license obtaining procedure. The financial authorities of each country issue them to operators who comply with precise specifications: protection of deposits in the event of bankruptcy, customer verification procedures, fight against money laundering, etc.
Each country is, therefore, free to set its level of requirement, higher or lower. From the broker’s point of view, applying for a license is, therefore, an economic decision. Because the more difficult a license is to access, the higher the cost and time to obtain it.
In the UK, the FCA is in charge of issuing licenses with the level of requirements being among the highest in the world. That’s excellent news for investors, but unfortunately, not enough to rest easy.
When selecting the appropriate trading intermediary, a good starting point is reading the broker review, an excellent source of information. In a broker review, you will find all the details about the broker, from compliance with the regulations, minimal deposits, types of accounts to assets available for trading, and many more.
Going for the right broker spares you from scammers’ trap
Alongside brokers who legally operate, one can find a significant number of outright scams on the market. And these are the sites that don’t follow any rules!
Typically, these sites try to make the appearance of well-known websites to fool the novice trader.
It involves a domain name very close to a well-known player. And very often, includes very aggressive telephone procedures that promise significant gains, on condition that you always deposit more.
However, from A to Z, everything is absolutely wrong. These online scams are quick to close overnight at the slightest alert with a very short lifespan, only to reappear under another name.
As this is mostly international delinquency, the chances of seeing your money again are very low. That’s why the local financial authorities offer a list of illegal “brokers” on their website.
Unfortunately, agility being the strong point of these scammers, you have to keep in mind that this list is always a little behind.
Therefore, if you are serious about your desire to trade effectively, you must first get all the necessary information about the brokerage company and the quality of its services.