Scams are a part and parcel of online services these days and online FX trading is no different. There are various types of scammers in the online world looking to scam individuals looking to trade in the foreign exchange market. However, the majority of FX scams in the market are related to forex brokers.
There are different levels of scamming too. While the all out scams usually only last for a short period of time, the long term scams can be usually found in the form of incompetent services and dishonest management.
There are a few forex brokers in the market that actually ruin the name of the whole community through their poor services and unfair methods of gaining money. FX broker services not only decide how successful you are in the market but these are also organisations to which you will be entrusting your hard earned money.
If you want to protect yourself from such FX brokers then you need to know how to tell them apart from the genuine forex brokers. Here are some qualities that you should look for.
Licences and Authorisations
Many countries have licensing authorities whose job it is to make sure that genuine services are offered to the end users. The Financial Services Board is this authority in South Africa which implements its objective by giving FX brokers a licence to operate in the country.
Usually the criteria for such licences are fairly tough which means that brokers have to meet various prerequisites to get such licences. Therefore, looking for proof of such a licence should be helpful.
The grander the business is the more reliable it will be. This is because the owners would otherwise lose more by providing bad services and losing their clients. From this perspective, your best option would be to go for FX brokers who offer a variety of services and assets for trading to their clients.
Size also tends to show experience but the best way of checking a forex broker’s experience is to see how long its operations have been active. The longer the FX broker has been around in the market, the better it will be able to dispense its services to its clients. At the very least, you should discount all brokers who have not been in the market for four years.
While you will be dealing with the FX broker, you will be doing this through a trading platform. This trading platform would bring the market within your reach. You will rely on the information provided by the broker about forex rates to make your trades.
Furthermore, you will also rely on the ability of the broker to implement your orders quickly enough to avoid slippage in the foreign exchange market. Also, you would have to analyse the market through technical analysis of historical data and trends which would be provided by the broker.
Each of these things is crucial for your success with an FX broker. If even one is not provided properly then you stand to lose a considerable sum of money in the market.