How to Choose a Forex Broker?
It is extremely important to choose a broker with a license from a reputable regulator.
A regulator is a government financial entity that issues licenses for local financial service providers, overseeing and regulating the operation of the local financial market as well as setting rules & regulations, issuing fines and closing down financial entities if they act illegally. how to choose a forex broker
The EU/US legislation for financial services are far more stringent than those of offshore jurisdictions. As a European financial service provider, it is much more difficult to obtain a broker’s license as the regulation is far more stringent and the quality standards of European brokers are higher. It is very important to check if Your broker has a license from a local financial regulator. Many vendors advertise with the term ‘broker’ without being licensed. An absence of license means, amongst many things, that your funds are at HUGE RISK, the trades You execute and the “balance” of Your account are nothing more than just numbers on Your screen and most probably You won’t be able to withdraw any funds from this fake broker. Sometimes they will allow the client to withdraw a small sum of his initial deposit, the client thinks that they are trustworthy, deposits even more money “on his account” not understanding that he/she is even deeper in the trap.
ALWAYS CHECK WHETHER YOUR BROKER IS LICENSED BY A REPUTABLE REGULATOR!!!
In order to check whether or not the broker in question is regulated you need to do the following easy steps:
1. Go to the main page of the broker you want to check
2. Scroll down until the bottom of the page
3. In the footer you can see: name/address of the company running the broker; information on the regulating body(ies) overseeing the broker’s operations; license number(s)
If you have found only the name of the company and address, but no info on regulators – DON’T TRUST THAT BROKER!
If there is a regulator stated alongside company info, next step is to identify whether or not you can trust him.
How can I understand whether or not a regulator can be deemed reputable? – You may ask.
The rule of thumb is the following: If the broker in question is licensed by a regulator from a country that You can’t point on a map – DO NOT trust that broker!!! As the retail investment market is international, most reputable brokers(and the ones we suggest to you at simplyForex.com) have business representation in several jurisdictions, most are licensed by several different regulators, even further increasing their trustworthiness. Don’t fall in the trap of trading with off-shore brokers with shady or no regulation!
In order to further make sure that the broker is not lying about his license (this does happen, unfortunately), we should:
1. Google the name of the regulator to find their official website (it is usually a website in the .gov domain)
2. In the search bar on the main page of the regulator, type either the name of the broker or the license number found in the footer to verify that the license is active and not revoked and that there is no warnings issued by the regulator.
For More Info: beginner forex trading