Every trader needs a brokerage company to enter the exchange market. It’s essential to choose a reliable Forex broker, especially in 2020. The trader’s income and the safety of transactions depend on its choice. You need to study information about the broker carefully. Find out the validity period and the availability of a license. It’s also crucial to know how long the company has existed and what reviews you can find on the web. Let’s check the main criteria you should stick to in 2020.
Things you need to check when choosing Forex broker
When it comes to money, you have to be careful. The main factor is the reputation and reliability of the broker. Read reviews, forums, and articles on the subject. Thus, you should ignore laudatory reviews and reviews on the broker’s website. They are rarely true. It is best to search for specialized forums.
Paid reviews are always easy to recognize. You should concentrate on negative or neutral reviews and how brokers resolve conflict situations. It is the best indicator of reliability. It is worth noting that you need to look for reviews for 6-12 months. Old reviews are no longer relevant and do not reflect the real work of the broker.
Licenses and Regulation
You can trust only a licensed broker. If the company is regularly audited and licensed, then you are more likely to resolve possible financial conflicts. Ignoring this factor, you can get an extremely unpleasant surprise in the form of a loss of a deposit after a short time. Why? Everything is straightforward. If the company does not have a license, then its activity is not controlled in any way. It can only be a good website and empty promises.
Companies licensed by a reputable regulator strive to provide high-quality service and offer the right trading conditions. And this is not surprising. Clients of such brokers can complain to regulatory organizations, and they will apply sanctions to the violator, up to and including revocation of the license. Each country has its laws regulating the Forex market and brokers. Consider this aspect. Many reputable organizations issue licenses, for example, Cyprus CySec, Swiss FINMA, Australian ASIC. It is especially worth highlighting the British Financial Market Supervision Authority – the Financial Conduct Authority. If there is an unwavering authority in the world of Forex regulators, then this is FCA.
It is another crucial aspect that you should pay attention to first. Many experienced traders recommend paying attention to trusted brokers. Consider a ten-year barrier as an indicator of company reliability. A broker who has worked in the market for such a period without reputational losses deserves some trust. The risk of bankruptcy of such an organization is lower since the company went through all the advertising stages and reached the breakeven point. Young brokers (1-2 years on the market) can offer favorable conditions and bonuses. Be wary of this. Even a company with 20 years of positive experience in the Forex market can overtake force majeure and financial problems.
How to conclude an agreement with a Forex broker
Choosing a reliable forex broker and starting to open an account on his website, many clients do not even think about signing an agreement with the company at the same time. Most traders do not read this document at all, and it contains important information. A legal agreement or contract is the voluntary signing of a document between two or more parties. It consists of fulfilling the obligations assumed, is an essential and inalienable part of constitutional law, and is aimed at protecting the personal and property interests of the parties.
Usually, a broker has many more rights than a trader, so choosing a reliable company with licenses from serious regulators is an important step. Typically, an agreement with a broker occurs automatically when you agree to the terms and conditions on the site. But you can sign documents at the office of some brokers.
Here are some types of contracts that are relevant in 2020:
- Public offer. It is such a type of agreement, according to which one party assumes the obligation to provide the declared list of services in full and assumes certain responsibilities. The other party, when signing a contract, agrees to its terms and conditions and must fulfill each item;
- CFD agreement. These are contracts for the difference in the value of underlying assets. They indicate that one party returns the second difference between the current price of the asset and the value established when the contract is completed.
Exaggerated factors and how to avoid scams
Newbies and low reputation brokers are actively promoting their authoring courses and training. Many give almost a 100% guarantee of your earnings. It is not true. Firstly, all training materials are superficial. Secondly, this is not the main criterion when choosing a Forex broker. Many companies offer training materials, even without registration.
Give up exclusive analytics. All kinds of trading signals, recommendations, and tips are mostly subjective. Even trading gurus are often mistaken. Employees of brokerage companies make forecasts based on technical analysis or economic events. You can do it for free and on your own.
Now let’s talk about leverage. Remember the relevant rule of the rule: The greater the leverage, the higher the risk. Leverage is important, but in practice, for a comfortable trade, it’s enough to have 1:50, a maximum of 1: 100. A greater leverage simply does not make sense, since an attempt to realize it can lead to a complete loss of capital with any sharp correction.
It is also important to have the MetaTrader 4 or MetaTrader 5 platform. Brokers often offer web versions of the trading terminal or even mobile applications. Compare real quotes with brokerage data. They must match.
Before signing a contract with a Forex broker, you need to know what points it is essential to you. Always pay attention to the reliability of the broker. Learn the terms of trade. Pay attention to the size of swaps and spreads, as this is the broker’s commission that he takes from transactions. It is better to start with a company that allows you to work with a small deposit size, which will avoid severe losses in case of an error. The speed of order processing is an important parameter that determines how quickly your deals will close. It is also worth paying attention to the presence of suitable leverage and spread. All these points will help you find a reliable Forex broker in 2020.