Forex offers a tremendous amount of opportunity and can be quite lucrative, but to make the most of this opportunity, you need a good Forex broker you can trust. After all, you are relying on your broker to help you reach your future financial goals. Therefore, trust is essential. You must be certain your that you are using a legitimate and trustworthy Forex broker, and above reproach.
No one wants to find themselves in a situation to discover they have lost their investments because they relied on a scam forex broker. The good news is that with some research, you can find a legitimate Forex broker to assist you with your foreign exchange investments.
Below, we will share tips to assist you in finding out whether you are working with a trustworthy Forex broker or you should keep looking.
How to Recognize a Trustworthy Forex Broker?
Before we begin exploring how to determine if you can trust your Forex broker, it’s important to point out that it is relatively easy to verify if a broker is licensed and legitimate.
If you are trying to verify your broker’s credentials and you have found it is difficult to get the answers you need from your broker, or you are not able to verify his or her credentials through independent sources, this should be considered as a red flag. You should stay away from such brokers in order to avoid Forex legal dispute
Below you will find the 6 ways to distinguish a trustworthy Forex broker from the scam Forex brokers:
1) Research Independent Reviews
The first step in checking out your Forex broker is to look into independent reviews. Online research can prove to be a veritable gold mine when you are trying to verify the credentials of any professional, including Forex brokers.
While it is inevitable that your broker will have had at least one unsatisfied customer, you should be able to get a good overall picture of your broker’s legitimacy by reading through online reviews. Keep in mind that the rating your broker has will be based on reviews posted by both past and current customers. This will give you the opportunity to gauge how satisfied the broker’s clients have been with its service.
In reading through reviews, be on the watch for red flags or warning signs that might include patterns regarding complaints, such as the inability to communicate, hidden fees, etc. A lot of negative comments or reviews should be considered cause for concern.
Even if your Forex broker is licensed, that is not to say that it is a good Forex broker. If some customers have reported having negative experiences with that broker, it is likely best to avoid it.
At the same time, if your broker has received some positive comments with relatively few negative comments, your broker is likely one you should stick with. Even the best Forex brokers will usually have one or two negatives regardless of how great their service might be, but if the majority of the reviews indicate good service, you can usually weed out the negatives.
2) Check with the SEC
Wondering how to check Forex broker license? Easy! A licensed Forex broker will need to register, by law, with the Securities and Exchange Commission or SEC in the United States. In the UK, it will be required to register with the FSA. If you are in the United States, you can also check with the Central Registration Depository or CRD. This is a computerized database that keeps records regarding not only all broker registrations but also any disciplinary actions a broker may have received. This database will also give you information about the broker’s education. Since this database is designed to be completely neutral, it can give you a solid idea of your Forex broker license and background.
3) Ask Around
Are any of your friends, family members, or colleagues involved in Forex investing? If so, ask them for their personal recommendations. This can be a particularly good idea if you are new to Forex and do not know where to turn to find a trustworthy Forex broker.
4) Interview the Broker
When searching for any professional, it’s always a good idea to speak to him or her directly. It’s amazing how much information you can obtain from a personal conversation. Consider asking the following questions when choosing a Forex broker:
- How does the Forex broker Work?
For instance, what are the Forex broker spreads? What is the Forex broker commission for all of your investments? How is the broker earning money? Brokers with commission are less likely to be a scam Forex brokers since the commission is additional income for the broker.
Although it sounds like a paradox, the more the Forex broker fees, the less likely is so be scammed. A good Forex broker profits from spreads, fees, and commissions, e.g. legit Forex brokers are making money when you are making money trading Forex. Opposite to that, scam Forex brokers profit from your misfortune.
- What is their preferred method of communication?
Everyone has different communication styles, and it is important to choose a Forex broker that will communicate in the manner you prefer. Some brokers are comfortable with only phoning their clients once a month while others will just send out emails. Still, other brokers may leave communication entirely up to their clients. Most trusted Forex brokers have a completely open-door communication policy.
- Do they offer a Demo Account?
A reputable Forex broker should allow you to open a demo account that you can use for practice. If your broker does not do this, you should keep looking for a good Forex broker.
- What is the Forex broker minimum deposit?
Different brokers will usually have different minimum requirements for deposits, so it’s important to find a broker whose deposit requirements are clear. A reputable Forex investment company will provide this information in an easy-to-understand way.
Contrary to this, a Forex broker scam is usually related to vague information and hard-to-understand content, hidden behind the complicated legal information.
- How up to date is the broker regarding technology?
A reputable and trustworthy foreign exchange broker should provide several trading platforms. Most of the leading Forex brokerages today offer apps along with web-based platforms. A legit Forex broker offers many trading channels for satisfying the needs of the trader.
5) Customer Support
What level of customer support does the broker provide? Slow customer support indicates you are not important to the broker. If you should run into issues, there likely will not be anyone to help. It’s better, in the end, to pay slightly more in fees and know that you have someone to help if you encounter problems.
If the broker you are considering offers additional leverage if you agree to sign up within the next day, this should be considered as a red flag. A Forex broker will usually only use this type of tactic if it is trying to get you on the hook before you have had sufficient time to perform due diligence. A trustworthy Forex broker simply will not need to resort to such tactics because they can obtain customers through quality service and word of mouth.
Finding a reputable Forex broker that is trustworthy and legitimate is vital to your Forex success rate. Every trade you make will be affected by your broker. This is your money and your future, so it’s worth taking the time to find a reliable and licensed Forex broker to assist with your investments.
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