A lot of people do not spend anywhere near enough time choosing the right forex broker. They will quickly choose one that offers an attractive sign-up bonus, or one that offers high leverage and decent charting software, for instance, but there are arguably more important factors that you should consider.
For a start you need to look at where the forex broker is actually based. It’s not generally a good sign if they are based offshore because this will generally mean that they are unregulated by any controlling body.
Therefore can you really feel confident depositing money with such a company? If you make some decent profits, you may have difficulties withdrawing your winnings, and furthermore if the company runs into financial difficulties, they may simply disappear overnight with no prior warning.
You’re much better off choosing a well-established forex broker that’s operating in a major European country or the US, for example, and are also fully regulated by the financial regulatory body for that particular country, so you know your money is safe.
For instance in the US fully regulated forex brokers are generally members of the National Futures Association (NFA) and are regulated by the Commodities Futures Trading Commission (CFTC). Similarly forex brokers in the UK, for example, are regulated by the Financial Services Authority (FSA).
Once you have drawn up a shortlist of brokers that are all fully regulated, then you can start narrowing down your list according to the criteria you are looking for. For instance you may be interested in opening an account that offers a free demo account or you may be interested in choosing a broker that provides complimentary charting software free of charge.
However it’s still worth pointing out that just because a company is fully regulated doesn’t necessarily make them completely trustworthy. You should also do plenty of research online before opening an account and depositing any of your hard-earned money.
This is quite easy to do because there are lots of review sites online so you can easily access a whole wealth of reviews on any broker that you may come across. Nearly all brokers will have one or two negative reviews, but if lots of people complain about the same thing, then that’s a major warning sign that you should avoid that particular broker.
Overall though if you take plenty of time to choose a long-established and fully regulated broker that has mainly positive reviews from other traders, then you won’t go far wrong.
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