Forex Trading – How to Check Your Forex Broker and Avoid Forex Fraud
Before you start with forex trading you must have a broker. Be careful choosing the right forex broker because this market is not regulated like the other financial markets.
About $2 trillion Dollars per day are traded on the currency market each and every day. It is bigger than any other financial market out there. The main market participants are big companies, central and commercial banks and other institutional traders.
Compared to the stock or futures exchange, there is no forex exchange market. The trades are made directly between the traders. A forex broker gives you access to this market but only to a part of it. A currency broker can make his own prices. If you would open two accounts at two different brokers then you would notice that you will get two different prices for the same buy or sell.
This system of pricing and trading opens a door for fraud and scams. There are forex brokers out there that do not play correctly. It is also allowed for FX brokers to trade against their customers.
When you choose a broker be careful with everything. Check where the money is held, if there is any form of guarantee or security. Check the spread, that means how much is the average difference of the buy and sell price in your currency. Find out for how long your broker is in the game and if the company has any references.
Verify their address and phone numbers, test out the phone support of the trading desk. Check and verify any of the brokers licenses and find out if the broker is regulated by any trusted third party company or authority.
There are some great and serious forex brokers out there which offer excellent trading platforms and support. They are not necessarily more expensive than other currency brokers because they trade more volume instead.