Choosing a forex broker can be one of the hardest choices you will make when it comes to finding an honest and reliable forex partner. Because your forex broker is someone you should have the greatest of trust in.
However in the unregulated market that is forex you will learn that any savvie thief can set up shop with a flash website and slick marketing in any country just for the purpose of relieving you of your capital.
An honest forex broker earns their money from the spread (the difference in the Bid and Ask price – or buy and sell price)OK, they still make money if you lose but when your account is wiped out – there is no more business from you.Remember they will make just the same amount of money wether you win or lose – But a winner will be doing business with them for decades.
They have a vested interest in your success – the better you are as a trader and the more successful you are – the longer the business relationship with you lasts – the more money they make. Simple.
The problem is, if you google the name of the broker and the word scam – not a single broker comes out unscathed!
But believe me some are out and out crooks who are little better than street muggers – actually a lot worse in many cases – its a shame the justice system lets these thieves off so lightly!
OK, rant over!
some things to be aware of when choosing a
forex broker
My broker is good for the forex system I use – but if you trade “the news” they do not seem as well liked. So even with an honest forex broker there are “horses for courses”
My thoughts on why all brokers seem to come out badly from usually reliable review sites is this – MOST people lose money trading forex – and like most of us they find it in some way comforting to have someone else to blame.
We just do not want to accept that our decisions are so wrong – especially when we have invested our own hard earned cash on every one of the trades we make – So the obvious candidate for blame is the broker – after all that’s where we see our money deposited.
The Forex Peace Army is one of the best forex resources I have come across, but even here you will have to accept that largely, the only people who post any reviews at all, have lost money and want to blame the broker.
All that said – it’s still time very well spent, investing many many days trying to sort out the wheat from the chaff.
If some deal sounds too good to be true – then beware. If a broker wants to give you a joining bonus – it would be my opinion you can wave goodbye to your deposit.With a broker who is nothing more than a scam, it is not unheard of for a phantom trade to mysteriously appear wiping out the gains on an otherwise profitable account.
I have never seen a “re-quote” from my broker, but imagine entering a trade perfectly only to have a window pop up asking if you wanted to take a price totally different (and always worse the the price you entered your trade on.)
Then there is “slippage” this is simply a difference in the price you expected to be filled at and the price you have been filled at. This can occur in highly volatile markets such as when a news announcement is happening. This could make a fill at a certain price impossible to execute . It could even make your stop loss ineffective so your broker will give you the next best price. If this happens too much, my opinion would be to first contact your broker and explain any problem and if you are not satisfied, simply “vote with your feet” and change brokers.
Not all brokers are evil. It is quite legitimate to offer high leverage – but a wise person would refuse this “gift”. If a forex broker kindly offers a massive leverage of 400 to 1, so you can make your first million within the month – tread very carefully.
Because high leverage can make you a fortune – but in forex, high leverage will lose you a fortune even quicker. Because for every pip the market takes you in the wrong direction – you will find it harder and harder to accept you made a bad decision. You will hang in there in the hope the trade will turn your way – at a certain point you could even move your stop loss to prevent the inevitable.
And the market takes the scalp of another – but there’s plenty more queuing up for the haircut!