When you choose a deposit conditions IB broker to whom you want to consign your money to invest on forex, you should
look for several features to consider before you actually open an account.
First of all, a broker
must be subjected to regulation by the regulatory authorities that have to
prevent frauds and ensure the final user from illegal behaviour. Among the most
important supervisors, we can find the
FSA in the United Kingdom or the NFA in the United States.
The very stringent
measures adopted by these supervisors should theoretically be established to
protect the trader and there are often annoying prior checks just to ensure the
customer with the maximum security.
Another important
element is linked to the heritage of the broker. In the event of a failure of the
broker, the main risk is that you might loose all the money on your account,
with the unique exception of a segregated
account: http://www.investopedia.com/terms/s
/ segregation.asp. This is in fact a separate account from the patrimony of
the broker but it is only reserved to customers with large volumes and often
intended for institutional investors. In the case of a failure, you just become
simple creditor of a bankrupt company, and this is why the careful assessment
of the level of capitalization of the broker itself is very important for
reducing a risk factor that cannot be eliminated anyway.
Thirdly, we can quote the
platform and the software. Since these are the operating tools that will allow
the trader to navigate on the market, a platform rich in content, charts, indicators
and of course underlying assets is a fundamental prerequisite. Demo accounts
are just aimed at that; if you will check the platform on which to run your trading
ideas before depositing your money, you
will be able to understand if it is adequate and able to afford studies,
analyzes, orders, excellent execution speed.
Everything related to
costs is one of those points that are often ignored on the forex since they are
not directly visible from the trader who is in front of simple bid and ask
proposals. Too bad that the reward is right in those proposals, and that is why
it is so important to immediately compare the bid-ask spreads tables that each
broker publishes on its website, a classic price list. In this case, however,
we must keep in mind that some brokers offer fixed spreads, other variable ones
depending on the liquidity on the market.
However, there are exceptions
also in this case; market makers and STP do not charge any fee but provide higher spreads, while ECN apply fees to each
trade.
Last criterion in
choosing a broker: the customer service. Phone and email now represent the
minimum standards to allow a broker to say that there is a basic customer
service, but nowadays technology is putting the companies in a position to
offer more efficient and effective services. For example, the chat is very
popular with customers used to work at any hour of the day in an area such as the
forex, where every minute can be a source of market volatility.
If we are not well
impressed by a customer service the first time, we should test it again, but if
tests continue to be negative it is better let it go, even if the steps above
have given excellent results.
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