How to choose a broker and not lose money
Trading Tips
Inspired by a post that was recently published on some trading community about losing money because a broker disappeared under the pretext of a hacking attack, I decided to write an article.
You will find here some tips especially important for beginner traders. Simply put, something you need to know.
Here we go…
How to choose a broker and not lose money
Beginning traders often ask us how to choose a good broker. In this regard, a few tips.
▸ Choose a good, big broker in your country. In case of a legal dispute you always have a chance.
The best are big brokers from USA, France, UK, Germany, Denmark, Switzerland — countries with strong financial regulations. Big brokers from Australia and Japan are also OK. I would avoid small countries, usually their financial regulations are worse and their execution is problematic.
▸ Definitely avoid brokers from unregulated countries.
▸ Avoid brokers from tax havens and faraway countries. In case of a legal dispute — you will lose the case with a very high probability.
Many times I have heard stories about how brokers from tax havens disappear with clients’ money. This was, is and will be the case as long as they find clients willing to deposit money to an unknown company. Do not!
▸ You should choose the best, big brokers with good reputation, from countries with good financial regulations and efficient law enforcement agencies. There are a lot of good brokers out there, there really is something to choose from and there is no point in taking any chances.
▸ Don’t just go by price/commissions!
▸ If you still have any doubts add an additional condition — the broker must have been in business for more than 10 years. In well-regulated countries you can check whether the company has existed, for how long and what it does. For example, in UK the FCA regulates companies in the financial field.
That’s it, should help in most cases.
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