Choosing a good broker is one of the most important rules when it comes to trading. There are millions available but all brokers are not the same.
When choosing a broker it is important to check the list of regulated brokers to see if the one you choose is regulated by a government regulatory agency. If they are not regulated, it is not excluded that they are scam.
We can define some brokers as ‘scam’ when their main feature is the absence (or almost) of the operation on the interbank market.
We already know that most of the brokers work is to match their clients operation. Doing so, they apply a commission, generally called spread, and cover any imbalances on the interbank market. If a broker does not follow this procedure it means, it happens that he become the counterpart of his client. In this case, against the market and the broker is no longer the mean to earn a profit.
Keep always in mind that brokers are interested when clients lose money because they might fail if clients become too good managing their accounts.
Almost all scam brokers have objective characteristics that allow us to distinguish them from the regulated ones.
These characteristics can be summarized in two groups: graphics and benefits.
Graphics and design elements are the ones that make attractive a site. Usually scam brokers use sites that are addictive but they have a very few tool.
Regarding to the benefits, they provide better monetary conditions than the regulated brokers. That is the case of the promise of very high profits with minimum deposit too low.
There is no system that helps you to create a capital gain in a very short time, neither to do it with an adequate capital to start trading.
Do not believe to brokers that offer 7 or 8 pips of spread, because they are never so high. Before choosing a broker, try different ones and always read the terms and conditions before opening an account.
When it is possible, choose a regulated broker because they operate following rules and procedures to ensure their traders account. They are always subject to periodic inspections by the appropriate organizations.
Even after you choose a broker, do not forget to withdraw your money periodically and leave only what you need to assure you a proper money management.
Your broker is your trustworthy man, but he does not have to know that… you must ‘test’ it day by day.