In the CIS benchmark for quality work on market FOREX for financial companies are the major Western brokerage houses. Serious investors chose them and, first of all, for reasons of safety. In many ways, these preferences are due to psychological causes. Historically, all the West (be it jeans, a Bank or broker) seems to Russian citizens who lived for tens of years behind the iron curtain, more qualitative, reliable and prestigious. However, the bankruptcy of such giants of the Forex market as the American Refco and Swiss Sovereign Financial Group made many of our fellow citizens, trading world currencies, a new look at the question of choosing a broker. So, what should pay attention when making a decision about the beginning of cooperation with one or another financial company?
let's Start with reliability. Reliable financial intermediary usually considered broker with a long history of work, license and ïîäêîíòðîëüíîñòüþ regulatory authorities, with the system of insurance of responsibility before clients, a well established system of risk management within the company, legal transparency, protection of contractual relations. The company has yet to be quite respectable, although each of us understands the term differently.
by Itself term work does not guarantee: as mentioned above, large Western company existed in the market long enough. However, the risk of losing money in the firm-something ephemeral significantly higher than the broker who provides access to its clients in the financial markets than one year. A long history of work is established mechanisms of risk management (otherwise, the company would have gone bankrupt), qualified personnel, reliable partners, financial reserves, etc. in a word, a company with a history of work has advantages over the newcomers on the market.
Documents and regulators. Unfortunately, as practice shows, the availability of licenses and accountability of regulatory agencies, whether government or industry, also gives a guarantee of safety of your money. However, this is a serious advantage in choosing a broker.
first, the licensing process itself cuts obvious Scam. The company is obliged to disclose to the state of their owners, to provide the statutory documents of the accounting statements. In addition, regulators in some form of monitoring the operational activities, the company's financial performance.
secondly, there is always the organization, where the customer can Lodge a complaint or claim. So, in the USA the control of brokers on the Forex market deals with the CFTC (Commodities Futures Trading Comission Commission on trade commodity futures) - a government Commission status as a Federal Agency. In England is the FSA (Financial Services Authority financial services Commission). In Russia controlling organization for margin transactions on the OTC market yet. However, if the Russian deputies will be engaged in this problem, you can assume that it will be the Federal service for financial markets. FFMS now controls the activities of the stock brokers, commodity markets and derivatives market. So when choosing a broker should pay attention to what the license is, who issued it and for how long.
In case of placement broker significant funds, not superfluous will ask, what guarantees the safety of your funds will give you a broker. In England and the USA such guarantees could be segregated accounts and money-back guarantees from the government. In the CIS and other non-regulated countries with reliable brokers are interested in a particular way to address this issue. For example, well-known brokers of Russia insure their liability to the client in an insurance company «Ingosstrakh» and «Consent», respectively. However, this is not the only way to show clients their reliability. This can be, for example, the guarantee of a major American or European Bank or another way.
At the beginning of the cooperation with this or that company, it is important to pay attention to the contract you are signing and on the basis of which then have to work (God forbid sue). The contract shall fully describe all the essential terms of your interaction with the broker, on the basis of civil law.
Serious company in its activity is guided not only by the contract, but also a public regulation of transactions transactions in which all registered numerous nuances (trading conditions, types of orders, disputes and other). Lack of regulations should be alerted to the potential client. If you are going to work with domestic broker, and for financial calculations you offer overseas company or even an offshore is a reason to think. Think about how and where will be resolved disputes, as you will transfer the money. Settlements with foreign firms (not even necessarily offshore) may fall under the «àíòèîòìûâî÷íûå» company, both in the CIS and abroad. Isn't nice, if your money is «hung» on the settlement account in the Bank or trading account will be blocked only because you are a citizen of Russia or another country of the former USSR? Again interest to your payments may sooner or later show the tax bodies at the place of your residence.
In the CIS, some brokers are involved in the betting scheme, offering its clients a bet on exchange rates. Here it is also important to understand and to be prepared for the fact that in case of dispute, your «bet» under Russian law are equated to transactions «pari», i.e. not subject to judicial protection.
Risk management. Many traders often asked the question «Where does my winnings in case of successful deal?». Usually the work of all dealing centers is organized as follows: small position broker «undertakes», i.e. performs the second party to the transaction, and large transfers to a larger company. Thus, gains client paid either from the loss of customers or of own pocket (which is, incidentally, why have a reliable broker should be a large amount of own funds, financial provisions). And large positions, usually this is the amount of 1 million and above, be passed on to the more major participants (banks, for example). Such a transfer of risk is called the overlapping of the net position. Often in small beginning companies overlap is not provided, and the clients are at risk in case of a big win left with nothing. Therefore, it is important to gently find out how have you organised the risk management in the company and where the dealing center overlaps the net position. Of course, all the details you won't tell (it was a commercial secret), but something will probably be able to find out. If your broker is absolutely refuses to say on the subject, then this is a reason to think - do you need this broker.
Now about reputation. Hard to argue whether the company has a positive reputation. And if so, on what grounds can be judged. Alas, nor the presence of prestigious awards and high positions in the ratings of our country (and not only we) are not a measure of good reputation. It is only a question of money. But the presence of negative publicity (deceived customers, court proceedings etc), you can find out quite easily using the search capabilities of the Internet and specialized forums.
the working Conditions are always important. The qualitative conditions of work traditionally include: exact rates and competitive spreads, trading with guaranteed performance of pending orders, modern trading platform, a wide range of instruments, interest on commercial Deposit customers.
In the issue of quotations it is advisable to check with your broker, from which he receives them. Usually these sources can be information systems type Reuter, Bloomberg. Great if the Finance company can confirm the right of retransmission quotes agreement. This means that it is not engaged in theft. It happens that the dealing center (especially if he is Russian) receives quotes directly from its Western broker. Periodically in the quotes flow of any broker happen «emissions», i.e. non-market transactions is clearly above or below current prices. These emissions can severely damage the client's open position (for example, by covering it with a heavy loss stop order). Preferably, find out in the regulations of the broker or orally, as such filtered emissions and filtered whether and how are disputes arising out non-market quotations. Reputable brokers usually voids all transactions through the release and return loss loser customers and the write off of profits earned.
Spread. Usually beginners in the Forex market when choosing a broker first of all pay attention to the spread size. And dealing centers, in turn, lure customers catchy advertising, saying «only we spread on ... followed name of the currency pair ... from one point and below». Experienced traders know that a solid and reliable broker is unlikely to become äýìïèíãîâàòü in this sphere, and not so picky related to the magnitude of the spread. Although, of course, not everyone likes to pay more when you can pay less.
a More important factor is the order execution. Around the guaranteed execution of pending orders are of great controversy. Some argue that brokers to guarantee the execution of the orders, take on greater risk than the brokers that such work with slippage. Without going into the debates, I would like to note that the guaranteed execution of pending orders when working with a reliable dealing center - a great benefit for the client. Let me give a concrete example. Imagine that before the release of data on unemployment in the USA you lift two identical position to buy the pair at a price of 1.21 in two dealing centers. One broker is guaranteed execution of pending orders, and another doesn't. Fearing the release of positive indicators and, as a consequence, the growth rate of the dollar, you place a stop order to both positions at the level of, say, 1,2. After the data is that the unemployment rate in the US fell much more than analysts had expected, and of course instantly drops to the level of 1.19, that is, to put it òðåéäåðñêèì language, «makes two figures». In one dealing center of the stop order is triggered, and you commit a hundred points of loss, and in the other you have a losing position at 200 points. Moreover, it can even increase if the exchange rate goes below. Of course, such situations are rare, but, however, occur, and this can lead to the loss of a significant (if not all) of the resources. This is why the issue of guaranteed execution of pending orders are significantly more important than the question of the size of spread.
Trading terminal and user experience
the Accepted standard of the trading terminal for Forex brokerages are:
1. the free demo account (i.e. the possibility to work out on virtual money, test a trading strategy).
2. graphics support, opportunities for technical analysis or data export to technical analysis systems (Omega and other).
3. reliable operation and low requirements to a computer and Internet connection speed.
Important factor when choosing a broker is the richness of the Toolkit, which is available for trading clients of the company. It is very important to try their hand at different markets, with different tools and conditions. Many brokers give the opportunity to trade currencies except synthetic instruments like contracts for difference (CFD) on American and European stocks. And some companies - even on Russian stocks, world indexes (Dow Jones, DAX, FTSE 100 and others), gold, oil, and so on.
the Important point is the interest on the funds on the trading account of the client, as well as the ability to trade discrete lots. Well, generally accepted standards of the largest Russian brokers were:
1. Round-the-clock news support for customers in the trading terminal.
2. Daily analytical research of the markets of currencies, shares, indices, metals.
3. 24-hour technical support.
4. Availability of a personal Manager for major clients
So, a good broker is composed of several important components: reliability, good trading conditions and usability. In the CIS market works of many companies and banks, which represent different combinations of these criteria. I hope my advice will help you decide with your guide in the world of Finance and avoid common mistakes when choosing a broker in the FOREX market.
what To look for when choosing an online broker
Reliability is the most important thing that should be noted.
Characteristics of reliability can perform the following parameters:
- How many years this office provides services.
- the Existence of full postal and Bank details.
- License for this activity.
- Terms of protection (insurance) from ruin.
Reviews about the company (you can find on the forums, conferences, from personal correspondence with working traders and so on).
What are the conditions I / o cash.
As the practice of crediting of Finance at the expense of much easier than to bring them back. Learn how this happens in the selected office can only be a trader received profit, but this will have to find.
the Minimum amount for opening a work account.
what currency pairs works.
Spread on the major currency pairs.
the Commission for the work.
Preferred brokers with a small Commission (better to do without it). But a small Commission may mean a corresponding quality of work.
the Software must be on the level. Evaluate the software, only work on a demo account in this office. Most brokers are free to provide this service. To have something to compare to try different software.
How much does it cost?
One major difference between Internet brokers in the minimum amount that must be on your account before the start of the òðàíçîêàöèé.
Among Russian centers are offices, which give the possibility to work (our specially the poor trader) with a minimum Deposit
even from 1USD,
Such firms are unlikely to derive Your bets on the market. Data institutions play against You according to the laws of Forex. Working conditions are quite firm. However, many provide a good software, and work with them pleasantly. If you are able to receive a stable profit in such institutions, you can easily go on to the more reputable brokers.
The small brokers you can start working with the minimum Deposit
To the middle brokerage firms can be attributed centers with the initial sum of a work account
Serious Russian and Western brokerage centers are focused on higher initial amount
Leverage. Commission. The spread. Leverage.
Leverage is allowed to work on Forex different brokers different. The most frequently used 100 and 200 fold shoulder, less 50, 10-year and 2-fold.
What this means?
When working on the Forex for profit have to speculate contracts multiples of 100 000 USD. This amount çàâàëÿëàñü not everyone, rich clients is not enough, and brokerage centers at least work with percent. Therefore, a more mass-market access and is available leverage. From 1000 USD at 100 times the shoulder you're just like you have $ 100,000. Profit in 1000 USD per day becomes a reality. Loss this amount is not less real.
For the services of a brokerage company has to pay. A charge may be expressed and disguised.
is most common fee for the transaction. It is expressed in a specific amount (for example, 20 USD) or paragraphs (worth 1_ãî-2_õ points).
Also may be charged separately for opening and closing the deal.
Have to pay for the provision of credit at transition through 0 hours. Usually 10-15 USD for a standard rate.
Meets payment for information services and the provision of software.
Implicit payment we produce keeping finances on the account of the company and not receiving any interest. However, for the sake of justice it should be noted that there are centers that charge You a percentage for raising funds to their account.
Also there are companies who report that work with them do not require remuneration and profit they receive through the spread. I can assure You that almost all companies use it, pushing the spread when opening or closing of the transaction, but prefer to remain silent.
the Difference in price between the offer and demand is called the spread. The spread may vary from one to two points to 50 -100 points, depending on market conditions.
In a quiet state of the market for small brokers considered normal spread 5-8 points for medium 3-5 points, for large 1-3 points.
When you open or close a position, there is a situation when instead of the price visible on the screen, a second worse. This is called the effect of slippage or by grip separation spread. And this effect is different not only in different offices-but it depends on the broker serving directly to You at the moment. The more carefully You decide the price, making the abolition of the abolition of the proposed conditions, the more annoy the broker, and he accordingly pushing environments, sometimes just to annoy You.