Most rookie traders worry a lot of about the reliability of a forex broker or forex dealer when they decide to open a trading account. After all, the real money is pumped in and surely we won't want it go the way as those involve in HYIP scheme. So what sort of things to look out to ensure maximum reliability?
Well, for sure, those brokers that are regulated will be much safer than those that aren't. However, even though being regulated in the broker origin country, it won't guarantee and secure the fund (even if the fund is segregated) for us who are in oversea who open an account with them. This recently happened to FXCM oversea traders. Only those in the States are compensated.
![]()
However, that doesn't mean FXCM is a no no forex broker company to go for. In fact, it is a very big and reputable forex broker company which is also listed in the NYSE. It even has its own currency research team.
No wonder forex brokers based in US are not very popular here as they all have the following restrictions:
1. A maximum leverage of 1:50. That means for every $1 you dump into your account, you can trade up to $50 trade transactions. It is rather small amount for retail traders as if they bought currency pairs in such a value, they barely make significant amount of money even if the pair moves hundred of pips daily!
2. No hedging allowed. That means one can only either buy or sell a certain currency pair at a time. If after buying the currency pair, example, EURUSD, he want to sell, he would have to close his earlier buy position (even at a loss). Of course, to work around this problem, US based brokers would advise you to open another account with them. Oanda is the forex broker that asked me to open another sub account with them to get around the hedging policy. The catch here is the margin requirement. We need to make sure we have sufficient capital in our account should the positions we took went the other way.
However, I did open one with Oanda as I found their customer support to be top notched ( they really are knowledgeable and went all the way out to solve your problem). Even though my first withdrawal facing some problems, I have no doubt at all that they will scam my money. Subsequent withdrawl proves to be a breeze and the money reached my account within a few days.
If one open an account with FXCM in UK, one can enjoy the DailyFX Plus which offers amultitude of trading materials and trading signals. Also the restriction of its parent company in US won't be imposed in its UK branch.
![]()
Having traded for some time, I personally prefer high leverage and hedging function. Other than that, deposit and withdrawal fees are worth checking as they might take a big chunk of your fund if the fund deposit/withdrawal is not so big. Also, brokers such as IBFX Australia will charge for inactivity fee. If no trading is done or no open trades are held for a period of 9 months, a $50 fee will be charged.
For testing for execution, slippage and spread widening, one can open a DEMO account with his preferred broker. No fee will be charged at all. Even though most brokers said whatever that take place in the DEMO server will be the same as those in LIVE server, I highly doubt it. However, a DEMO account is the best way one could get as close as to the real thing without pumping in real money and one can also practice and test one's trading strategy until it starts to make money.
Spread is the cost of doing a trade.There are 2 type of brokers, one offers fixed spreads while other variable spread. The variable spread offered will be lower than the fixed type spread but come news announcement time, the spread will widen.a lot. Fixed type forex brokers also normally offer cash bonus for a certain amount of deposit being made to the trading account to attract new clients while variable type spread brokers rarely do so.
![]()
If one is rational enough, one would go for the variable type brokers as over one trading period, those fixed value spread would definitely contribute a big cost to the transaction of the trades. And I believe it is very rare for a rookie to be able to withdraw the cash bonus as one would have to trade a certain amount of trade lots to be eligible for withdrawal. By that time, most beginners would not only lost the cash bonus but also their trading capital.
Finally, after one have choosen his preferred forex brokers, he/she can check whether their selected brokers entitled for cash rebates. Cashbackforex is one such company that offers cash rebates for every trade you made. They act as an introducer to the forex brokers that you sign up through their website and a portion of their commission will be credited back to you. Many people are skeptical about such a rebate offer but believe me, they are legit and not scam. They do give you real money.
Most new retail forex players often worry about the trustworthiness of a forex broker and stuff like whether they would ever get their money back after withdrawal. From my experience, this at the least thing to worry as most brokers do as they intend to stay in this business for some time. The most important thing one should concentrate is to able to have consistent profit during a prolong period of time, such as months after months. If you can reach this stage, trading is really a business for you and I guess we can call that trading for a living. And with such a feat, you can periodically (maybe once a month) withdraw the money being made and hence only trade using the profit generated.
![]()
Well, for sure, those brokers that are regulated will be much safer than those that aren't. However, even though being regulated in the broker origin country, it won't guarantee and secure the fund (even if the fund is segregated) for us who are in oversea who open an account with them. This recently happened to FXCM oversea traders. Only those in the States are compensated.
However, that doesn't mean FXCM is a no no forex broker company to go for. In fact, it is a very big and reputable forex broker company which is also listed in the NYSE. It even has its own currency research team.
No wonder forex brokers based in US are not very popular here as they all have the following restrictions:
1. A maximum leverage of 1:50. That means for every $1 you dump into your account, you can trade up to $50 trade transactions. It is rather small amount for retail traders as if they bought currency pairs in such a value, they barely make significant amount of money even if the pair moves hundred of pips daily!
2. No hedging allowed. That means one can only either buy or sell a certain currency pair at a time. If after buying the currency pair, example, EURUSD, he want to sell, he would have to close his earlier buy position (even at a loss). Of course, to work around this problem, US based brokers would advise you to open another account with them. Oanda is the forex broker that asked me to open another sub account with them to get around the hedging policy. The catch here is the margin requirement. We need to make sure we have sufficient capital in our account should the positions we took went the other way.
However, I did open one with Oanda as I found their customer support to be top notched ( they really are knowledgeable and went all the way out to solve your problem). Even though my first withdrawal facing some problems, I have no doubt at all that they will scam my money. Subsequent withdrawl proves to be a breeze and the money reached my account within a few days.
If one open an account with FXCM in UK, one can enjoy the DailyFX Plus which offers amultitude of trading materials and trading signals. Also the restriction of its parent company in US won't be imposed in its UK branch.
Having traded for some time, I personally prefer high leverage and hedging function. Other than that, deposit and withdrawal fees are worth checking as they might take a big chunk of your fund if the fund deposit/withdrawal is not so big. Also, brokers such as IBFX Australia will charge for inactivity fee. If no trading is done or no open trades are held for a period of 9 months, a $50 fee will be charged.
For testing for execution, slippage and spread widening, one can open a DEMO account with his preferred broker. No fee will be charged at all. Even though most brokers said whatever that take place in the DEMO server will be the same as those in LIVE server, I highly doubt it. However, a DEMO account is the best way one could get as close as to the real thing without pumping in real money and one can also practice and test one's trading strategy until it starts to make money.
Spread is the cost of doing a trade.There are 2 type of brokers, one offers fixed spreads while other variable spread. The variable spread offered will be lower than the fixed type spread but come news announcement time, the spread will widen.a lot. Fixed type forex brokers also normally offer cash bonus for a certain amount of deposit being made to the trading account to attract new clients while variable type spread brokers rarely do so.
If one is rational enough, one would go for the variable type brokers as over one trading period, those fixed value spread would definitely contribute a big cost to the transaction of the trades. And I believe it is very rare for a rookie to be able to withdraw the cash bonus as one would have to trade a certain amount of trade lots to be eligible for withdrawal. By that time, most beginners would not only lost the cash bonus but also their trading capital.
Finally, after one have choosen his preferred forex brokers, he/she can check whether their selected brokers entitled for cash rebates. Cashbackforex is one such company that offers cash rebates for every trade you made. They act as an introducer to the forex brokers that you sign up through their website and a portion of their commission will be credited back to you. Many people are skeptical about such a rebate offer but believe me, they are legit and not scam. They do give you real money.
Most new retail forex players often worry about the trustworthiness of a forex broker and stuff like whether they would ever get their money back after withdrawal. From my experience, this at the least thing to worry as most brokers do as they intend to stay in this business for some time. The most important thing one should concentrate is to able to have consistent profit during a prolong period of time, such as months after months. If you can reach this stage, trading is really a business for you and I guess we can call that trading for a living. And with such a feat, you can periodically (maybe once a month) withdraw the money being made and hence only trade using the profit generated.
