Looking For a Broker? 3 Things To Avoid When Searching For One
Markets Forex

6 Likes 0 Dislike 15 Replies
2 years ago

Go to Google and search for a Broker. People do so without knowing what exactly is important or required when picking the right broker. They hit the search button, without knowing what the real pitfalls are. Why do they do this?

The main reason is ease of use. Very few people go pass second page on Google to find the right broker when trading. Unfortunately most new traders lack the knowledge to find a correct broker for their needs. In this article we will be working with the pain-avoidance on your road to financial freedom.

We are going to look at the three primary mistakes that a person would want to avoid. Just for background knowledge, you'll need to know what types of broker there are and which ones are on your side . Additionally, you will need to know what to look for when picking your broker.

Just what things should we avoid? And why should they be avoided? Well, when we're confronting finding the right broker, then you will wish to make sure that your money will be safe with them.

So let's take a look at and analyze the three things you need to avoid:

1st, Avoid Market Making Brokers (Brokers that trade against you). This is of major significance since Market Makers are brokers that trade against you. Even worse, they know all your trades and stop losses. As a result they can and sometimes do abuse their power and either slip you or spike you out of trades. A dead giveaway for these brokers is when they offer either Binary options or Spread betting. There are different types of brokers and simply avoiding MM's in the long run could potentially save you a ton of money. Very important for serious traders.

Secondly, Avoid Brokers that are located/regulated in offshore areas.  And why is that? The main reason is that its usually quite easy for anybody without any experience to become a regulated broker there. The easier it is to be regulated for a broker the less precautions they will take to ensure that you and your money are protected. What do you look for to discover where they are regulated? Just ask them where they are situated. Any islands/ offshore places should be treated as zones to stay away from (In my opinion). 

And Last, Avoid Brokers that don't offer Capital Protection.

Capital protection is where your money is protected by law. This is because Brokers sometimes do lose their own money (brokers who went bankrupt as a result of the EURCHF move comes to mind) and you do not want to be in a position where you are out of pocket as a result of this. How do we find this out ? Usually the broker will have it somewhere on their page. This is something that they should be "proud" of. Remember , asking never hurts.

In the end, the final decision to pick a broker will be yours only.Whenever you avoid these three things you are going to have avoided the largest and most important negatives. This should go a long way in helping you solve, remove or avoid the potential issues associated with picking the right broker.

Have a look at the main reason why the EURCHF moved so much in my next Thread in the Market/ Forex Page. http://www.communityft.com/feed/markets/forex

Posted 2 years ago 0 Likes   0 Dislikes

I agree with everything that everyone is saying, however, one of the things I really like about the academy is that you're not continually bombarded with Broker promotions and adverts.

I for one, don't miss banners up and down the sides of every forum page and in every post.

Who the broker actually is, is not as important as the typical screening process to find a suitable broker. 

At a very high level.....

  1. Straight Through Processing (STP)

  2. UK Regulated

  3. Wide Range of Markets

Posted 2 years ago 0 Likes   0 Dislikes

That is True Twinky, I think that the broker topic is a big one as most people really want to know who are the trustworthy brokers. 

Posted 2 years ago 0 Likes   0 Dislikes

It is a pity that we cannot mention different brokers as Im sure that there are good ones out there. 

Posted 2 years ago 0 Likes   0 Dislikes

Thanks guys for the feedback guys ! 

Posted 2 years ago 1 Likes   0 Dislikes

Great post Sidekick and thanks for the input.

Have a good day. 

Posted 2 years ago 0 Likes   0 Dislikes

Once you start posting broker links here, they'll get removed 'm afraid.

Posted 2 years ago 0 Likes   1 Dislikes

From what I know we cant suggest any brokers here... Have a read the Terms... 

Posted 2 years ago 1 Likes   0 Dislikes

Again, I will ask this (as it would help many) - 

Nice information sidekick. 

I actually have 2 out of the 3 covered, offshore is the one that I am not to comfortable with. How about taking this one step further and suggest 2-3 US STP Brokers with diversity? That would help many here, I am sure.

Thanks in advance.