How to Select an Honest Broker

[anujpaul 10]

The best advice I can give is don’t trust anyone whose reputation you cannot validate and whose association is not legitimately tied to the actual forex market. This is especially important when selecting your forex broker.

 

The allure of trading forex can be overwhelming. It attracts many eager fx traders willing to gamble away their life’s earnings. Unscrupulous forex brokers, signal providers, fx educators, software peddlers, and forex frauds are waiting, with baited breath, to take your money and turn it into a profit for themselves – all at your expense!I traded under forex-metal and got benefit a lot.

[Jack Francisco 10]

The best advice I can give is don’t trust anyone whose reputation you cannot validate and whose association is not legitimately tied to the actual forex market. This is especially important when selecting your forex broker.

 

The allure of trading forex can be overwhelming. It attracts many eager fx traders willing to gamble away their life’s earnings. Unscrupulous forex brokers, signal providers, fx educators, software peddlers, and forex frauds are waiting, with baited breath, to take your money and turn it into a profit for themselves – all at your expense!I traded under forex-metal and got benefit a lot.

:helloooo:

It would be better if you choose one among at least 3 brokers with a solid background,with many years in the markets,well respected,with a sound capitalization.

 

They could be one n America,one in Europe and one in Asia.Then you spread your capital among them and plan to withdraw regularly.

[TheNegotiator 13]

I traded under forex-metal and got benefit a lot.

 

Unless there's some sort of benefit for trading fx through company based in Panama, I would suggest that it might be better going for someone a little more mainstream.

[jonnyfx 10]

:helloooo:

It would be better if you choose one among at least 3 brokers with a solid background,with many years in the markets,well respected,with a sound capitalization.

 

They could be one n America,one in Europe and one in Asia.Then you spread your capital among them and plan to withdraw regularly.

 

100% agree with your post

[Obsidian 10]

-don't trust reviews on the forums made by members who only got a couple of post counts

-check their financial history, capital etc

-check their history on regulators' web sites

-check if they have a real forum which account holders can freely speak

 

it almost took a month for me to decide and this was back in 2003

[Jack Francisco 10]

100% agree with your post

 

Thanks Jonny.

 

Important conditions for selecting your forex broker are:

 

- Borkers registered with CFTC : Commodity Futures Trading Commission or/and member of NFA : National Futures Assosiation .

 

- Support answer you very very fast

 

- no minimum amount to withdraw

 

- Withdraw between 5 min to 24 hour (online banks)

 

- small minimum deposit like $50 or $100 . (this condition is not very important because there some great brokers that their deposit $5000 minimum)

 

- Logical BONUS

 

- Small spread for majors :haha:

[zdo 20]

Color me excessively cynical

… and…

I’m sorry to have to break it to you etc, etc.

but when the risk / reward of current exposure and revenue potential shifts to the point where it’s ‘better’ to take the clients’ money - it’s best to just assume they will choose to take your money

regardless of reputation

regardless of longevity

regardless of location

regardless of size

AND REGARDLESS OF ‘REGULATORY AGENCIES’

 

:helloooo:

Honest and Broker cannot be in the same sentence together.

In a previous lifetime I was in the brokerage business…

got acquained with many firm principles of all types of 'brokerages'

got out, primarily for these very reasons.

Edited October 10, 2012 by zdo

[steve46 12]

Color me excessively cynical

… and…

I’m sorry to have to break it to you etc, etc.

but when the risk / reward of current exposure and revenue potential shifts to the point where it’s ‘better’ to take the clients’ money - it’s best to just assume they will choose to take your money

regardless of reputation

regardless of longevity

regardless of location

regardless of size

AND REGARDLESS OF ‘REGULATORY AGENCIES’

 

:helloooo:

Honest and Broker cannot be in the same sentence together.

In a previous lifetime I was in the brokerage business…

got acquained with many firm principles of all types of 'brokerages'

got out, primarily for these very reasons.

 

I was going to say a few things of my own invention, but as fate would have it, this is the last post before mine...I really have nothing to add except my agreement....especially with respect to these comments

 

regardless of reputation....etc

 

unfortunately this seems to be true....your best and (in my opinion) only bet is to find a human being you can relate to, and develop a relationship with over time, who happens to work for a brokerage....and even then.....

 

In contrast to the "old days" when I used to keep a significant amount of $ in my account, I NOW keep only the minimum needed for intraday business...I sweep the account EVERY Friday, and I make sure my accountant reviews the periodic balance sheet submittals that they send to me....I doubt that it will make a great deal of difference if for example someone within the firm decides to embezzle or do something illegal (as happened with Peregrine recently)...but for now it is the best I can do..

 

Good luck

[Obsidian 10]

Honest and Broker cannot be in the same sentence together.

 

you are right zdo :rofl: it sounds as funny as a honest politician..but we have to choose one (or more) anyway...

[TheDude 10]

Seeing as the 1st post was related to FX, I'd suggest that if you really want to trade FX, do it with futures.

 

Unless you have a serious account, you'll be trading against the broker in retail FX, not the market. It's a joke. Anyone who thinks they are trading in the real FX market is kidding themselves - or they are trading with moronic leverage - or they are have a multi million pound account.

 

Not only that, all you have is price. No volume, no flow, just a broker posting a quote which will depend on your position anyway. Most retail traders always overlook how much commission and spread hurt their account. Its a key reason most lose. If your giving up 1-2 ticks a side because the broker is massaging your quote, you have very little edge.

 

With futures, your money is generally safer (still - despite some frauds we all know about), the market is centralized meaning it's fairer and you have more trade information to utilize.

[Angelnish 10]

Cross check them against live and demo feeds from other brokers. That will give you some small defense against manipulation, or at least will tell you when it is happening.

[Perrin 10]

I have spent the entire evening (it's now gone 1am) reading TL and thinking and trying to figure out my next move.

 

I currently trade UK stocks. It's ok, I suppose. I've learnt a lot in the past year of 'real' trading (and I reseached a lot in the years before that). However, the costs of trading UK stocks are massive. The commissions and sdrt (stamp duty reserve tax) really hits me. I always knew it would have a big impact on my trading of course - how could it not. But when I first started I assumed it's what everyone has to pay, and the only way to learn was to get in and do it, despite the charges & tax.

 

The amount it costs to buy stocks unfortunately also restricts me from feeling that I can exit a position and re-enter with ease, because of the large cost whenever I take on a postion. And that's not a good feeling to have if you want to be able to take your stops.

 

First 6 months weren't great (weren't bad though, looking back my discipline was very good), the most recent 6 months have been much better despite the costs.

 

So. Here there I was, thinking to myself, "There must be other ways of doing this, without such restrictive costs? What on earth are these things called 'Futures' and 'Forex'? I'm not sure I can trade them, they're a bit alien to me. But I must force myself to check them out."

 

So, onwards and upwards. I had an idea of trading forex. After all, forex is advertised everywhere, everyone loves forex. It's the most traded market in the world! Perhaps I could get in and out like a silent assassin and take money, everyone's a winner!....

 

So, of course I read about it. I have tried to read as much on TL as possible and to figure out a UK broker to use ideally based in the UK - not easy. Not least because I now find out that most forex brokers in fact are bucket shops. I had my head in my hands, exclaiming, WHAT!?

 

I thought I was smart, there's no way you'd catch me using spread betting, as that's just bucket shops like the olden days of Jessie Livermore. No way. I'll go direct to the real market, I'll trade FX like the pros do....

 

Spot forex = spreadbetting = bucketshops

 

Oh I'm sure they're all whiter than white... Honest as the day is long, no doubt (!) But my plan was to trade with my broker on my side, not against them (if they don't hedge my orders) where they make money if I lose. I thought that's what forex was.

 

It makes me want to shout out to everyone 'hey do you actually know what the heck is going on with your broker??? are you even trading the markets? is anybody even trading?'

 

Everything looks shiny and sophisticated, websites look great, even the jargon fits. Trade forex. Be a trader. I should have guessed when they offered 'spreadbetting' and 'cfds' along with 'forex' - something I thought was legitimate.

 

I know as I am currently swing trading then it's less likely to affect me quite as much if my broker is the guy I'm trading against. But still. Ughh. Imagine, I also had thoughts of perhaps doing some trading during the day. That would be a right laugh doing that, being up against my own broker now wouldn't it. A right bloody laugh.

 

What are they called brokers for? It's not supposed to be their job to make you go broke!

 

Shouldn't some regulatory agency make anyone 'trading' be shown a big red lettered bold flashing lights disclaimer saying 'IN TRADING FX WITH US YOU WILL BE BETTING AGAINST US AND WE HAVE A VESTED INTEREST IN YOU LOSING. HAVE A NICE DAY.'

 

I know, I know, caveat emptor and all that. That's what I'm doing. But what about all the other poor sods who just get taken advantage of. Not to mention what about me having to spend hours upon hours trying to figure out what's honest and what's dishonest. Why can't everyone just be nice.

 

Sorry for rambling but it's gone 2am now and I feel like I live in the matrix. Not just with trading either. *sigh.*.

 

How many people actually know that if they start trading forex it's only against their broker? Is it just that I didn't know because I was ignorant and hadn't looked into it, but everyone else already knew and they all will say "well duh of course its against the broker, its gambling, what do you expect". I think I expected it was against a large fairer market (whatever that is). Oh well.

 

So. Now I'm looking at DMA futures

or Foreign Exchange via Currenex platform (but I also read that under a certain value then that's against the broker too?)

What traps and pitfalls and twists and turns await me with them I wonder?

 

Oh, man. I know trading is just nonsense really. Of course it's strangely interesting with crowd behaviour, psychology, personal development, etc. But it's also just some stupid number going up and down based on what some idiot wants to pay for it. It's just a crappy game. But ffs, why couldn't it be something of a level playing field. There's so much smoke & mirrors and misinformation and gawd knows what. Ugh.

 

Sorry for all that. I just felt like I needed to write something. It's theraputic.

 

Cheers.

[Perrin 10]

Oh, man. I know trading is just nonsense really. Of course it's strangely interesting with crowd behaviour, psychology, personal development, etc. But it's also just some stupid number going up and down based on what some idiot wants to pay for it. It's just a crappy game.

 

I wanted to write a post to apologise for calling trading 'just nonsense', 'some stupid number going up and down based on what some idiot wants to pay for it' and 'just a crappy game'. That was insulting to everyone who has put time & effort in to trading.

 

I insulted tens of thousands of my fellow TL members in one single paragraph! That's quite a lot of people that I owe an apology to. I apologise for saying those things (sorry everyone). Ironically I also insulted myself (sorry me).

 

I think I meant that trading is a business that, in essence, is very simple. However, it may take a lot of time & effort before it becomes simple. I think I lost perspective on just how much effort we all put into this. I didn't mean to sound ungrateful for the wisdom that is available on this site.

 

Thanks,

Perrin

[DbPhoenix 42]

Actually you learned that trading is not a video game, which is what nearly all newcomers seem to think. That may be your first step.

[Perrin 10]

Interestingly (for me), I went to an auction today (a real auction in a room), bid and bought an item. It wasn't as scary as I thought it would be (I just went there and did it - the lot came up, I waved at the auctioneer, no one else wanted the item so it was "SOLD to the gentleman at the back!"). It wasn't anything special, just a general auction of household goods from house clearances.

 

But I remember you saying about the market = a market. Today I was sitting in a room with people bidding. I was watching them bid. I was wondering about what were their plans of what to do with the items they were bidding for (they were possibly going to use the items themselves, although most people bidding looked like they might try to sell items later through their antiques shop (I pictured most of them as savvy antiques dealers or simply re-sellers who have an eye for an items value), or perhaps they are buying stock cheaply and will be storing it away for months in a warehouse until the market has improved).

 

It was basically the same thing as trading online using a computer, like we do, buying stock and selling it at a later date.

[DbPhoenix 42]

And that may be your second step :applaud:

[SIUYA 11]

in Oz, most houses go to auction to be sold - - open out cry - I think about 50% end up selling here, and the rest usually have a negotiated settlement of some sort......its normal. (fun, but scary)

 

Its also an eye opener having to bid for what is usually the largest purchase you will make.....there are rules, and there are also rules you must set for yourself to not let the emotion run away with yourself.

I have bid on behalf of friends before and its almost easier as you set the rules before hand, dont get to emotionally attached to the price and the frenzy and just go with whats happening.

It is certainly well worth attending and bidding at auctions for the experience - maybe not to buy a house but something simply to go into it.

 

As to keeping the post on topic - if you think selecting an honest stock broker is hard- try real estate

[jiken 10]

Honest broker is not offering any funny business. Like earn from your losing. Or giving a higher bonuses than you can expected. All those bull shit broker should be avoided.

[Galacticus 10]

Stick with IB and you will be fine.

 

See independent brokers reviews:

Brokers - Forex Brokers - Trading Firms - EliteTrader.com

[4EverMaAT 10]

How timely was this post. The good news is that there are several legit brokers in well-regulated environments in which to achieve this.

 

Nothing wrong with trying out a broker who you think might have potential, even if they may not meet your grade-a criteria. Multi-broker diversification is a wise idea. Not only for safety of funds, but the ability to test different execution models, spreads, etc with your expert advisor or strategy.

[arndude 10]

I would like to add an additional risk with trading forex, based on my personal, recent (last fall) experience. A major, well-established broker, which offered forex trading as well as other trading accounts, went into bankruptcy, thanks to the company CEO absconding with a huge amount of customer funds... over time and evidently unchecked by any regulatory agency.

 

It appears at this time that some accounts will be reimbursed, at least partially. However I learned the hard way that forex is not insured in any form and it is highly likely that my (fortunately small) account has made its' way into the personal account of the ex CEO... never to return.

 

Beware the forex market... from any broker.

[Bluebay 10]

Ok there are some real bad crooks out there and they are just out to make money from you fact. But, then the majority of brokers who are registered with the FSA etc are what I can call honest. Perhaps they are just cleverer than most traders who expect to beat them after a month or so studying charts and then fail miserably.

I was short 40 contracts on FTSE last night before the drop and made 1 bar but I could have made 3 times that if I had the guts and was clever enough to hold out. Yep I should have used a trailing stop but in the heat of the moment with dogs barking and kids screaming it's not so easy. What is easy, is hindsight.

Practice makes perfect and I think I need another two years before I will qualify and get my trading degree that I will award to myself.

You cannot become a Doctor or a lawyer without studying for years.

But all this said the fact of the matter is there are some very clever people on the other side, I am really not that clever at all. All I am trying to do is to learn as much as possible try and stick to times and rules and not take chances.

I hope this helps someone.

[Ingot54 13]

I would like to add an additional risk with trading forex, based on my personal, recent (last fall) experience. A major, well-established broker, which offered forex trading as well as other trading accounts, went into bankruptcy, thanks to the company CEO absconding with a huge amount of customer funds... over time and evidently unchecked by any regulatory agency.

 

It appears at this time that some accounts will be reimbursed, at least partially. However I learned the hard way that forex is not insured in any form and it is highly likely that my (fortunately small) account has made its' way into the personal account of the ex CEO... never to return.

 

Beware the forex market... from any broker.

And that, my friends, is the moral of the story.

 

Human nature.

 

Greed. A virus that affects us all, in one form or another.

 

Greed = fear of future lack.

 

Think MF Global and PFG Best.

 

Whatever the reasons they paint on it - these brokers did not care about the security of their clients.

 

No broker does.

 

Segregated funds? Don't make me laugh!

 

The funds are only segregated so they remain intact when the secured creditor gets first call on the assets of the bankruptee ... that is ... your broker!

 

In addition to conceding a possible deficit at the broker-dealer,

the latest plan narrows recovery ranges for holders of MF Global's

$2.2 billion in unsecured claims. Such creditors, which include

the Silver Point group, are now projected to recover between

13.4 percent and 38.9 percent of claims, a range that had been

pegged at between 11.5 percent and 41.5 percent in the earlier plan.

 

The updated proposal specifies that lender JPMorgan Chase & Co

will recover all of its roughly $7.8 million in secured setoff claims

against MF Global units, and that an unsecured liquidity facility,

for which JPMorgan was a key lender, will recover between

13.4 and 38.9 percent of its $1.15 billion claim.

 

MF Global Customers Will Get Most of Their Money Back: Freeh

Edited February 21, 2013 by Ingot54

[Ingot54 13]

The bottom line is: You have no way to be certain your broker is honest.

 

Go with long-established firms.

 

Keep your account lean.

 

Read posts #6 and #7 - pretty much sums it up.

 

Beware who you believe:

 

Nongqawuse - Wikipedia, the free encyclopedia

[rplust 10]

The bottom line is: You have no way to be certain your broker is honest.

 

Go with long-established firms.

 

Keep your account lean.

 

Read posts #6 and #7 - pretty much sums it up.

 

Beware who you believe:

 

Nongqawuse - Wikipedia, the free encyclopedia

 

I agree with what you say but not the last sentence.

"Beware who you believe"...my answer is: Nobody

There is no reason having to believe anybody. Business is investment and as with any investment there is risk involved being it the type of business or the people or companies you deal with. There is no insurance. Companies are set up to make profit and are not charity organizations.

And you are the source of their income. You chose a broker as you make decisions in trading i.e. following high probability decisions and spread your risk. Don't keep your eggs in one basket. And keep you accounts at a minimum at all times according to your trading size.

 

And as several posters have mentioned, stay away from brokers located in obscure locations and stay away from sweet business deals with ultra low spread and bonus offers made to lure innocent people into opening an account. There is nothing free on this planet.

On a last note: learn to trade higher time frames like D1 as many issues like fills, slippage, spread etc. will just vanish. I believe, many traders on ultra short TF scalping missions have a suicidal attitude and try to blame many failures on the broker.

 

Happy trading! And stay away from bad trades and bad traders....lol