Most forex traders attest to the statement that successfully trading the currency market may be a relatively easier task than finding a broker which will be trusted. However, this saying isn’t popular among successful traders, for whom trading within the currency market is their main source of income, as they are doing not see the necessity to create such accusations and instead target studying the background of the forex broker before opening a trading account with him. There are complaints and doubts surrounding most online brokers.
To come to a conclusion on this sensitive issue we are going to first must take a look at the most reasons why some might label a forex broker as a fraudulent company. we’ll then explain each of those reasons so we are able to finally make an informed decision about the reliability of the broker we will work with.
Reasons why you may consider an unreliable forex broker
The trading platform offered by the forex broker is meant to be stable most of the time, even during important news releases. All brokers know that the trading platform is that the backbone of their business and so it’s logical that they’re aware that the recurring problems that include it’ll lead clients to seem for other companies. this can be why serious brokers are keen on using powerful servers that are ready to handle cases where there’s a major increase within the number of trading orders, like during the discharge of some important news. However, it’s still possible for the platform to encounter difficulties once or twice during the year where some unexpected events may cause a freeze or disconnection with the server, as happens with news of remarkable importance. Some novice traders are quickly drawn to the notion that their nondepository financial institution is being dishonest, which is usually not the case. However, if the platform experiences instability again and again during the month, especially during the discharge of important news, the trader during this case will have good reasons to doubt the motives of this broker.
The market usually suffers from an absence of liquidity during important events and news, which is one amongst the most reasons for the emergence of re-quotes. In fast-moving markets, a delay in placing a trade order by some fractions of a second may end in a failure to catch the target entry price. The trade order is barely executed after the forex broker passes it to a liquidity provider. Therefore, re-quotes are a logical consequence given the character of the correlations that collect different levels of brokers and liquidity providers within the exchange market. it’s impossible to completely avoid requotes, but the broker can reduce their occurrence by utilizing powerful servers and contracting with an oversized number of liquidity providers. Frequent re-quotes, during which the trader is obliged to extend the price or decrease the damage, could be a logical reason to question the credibility of the broker or a minimum of its efficiency.
Traders who don’t wish to lose entry opportunities at certain points because of re-quotes may place ‘market orders’, noting that they’ll also experience slippage in volatile markets. Slippage could also be positive or negative in terms of its effect on the trader. But a trader experiencing negative slippages frequently isn’t a reassuring sign in the least. that’s why exposure to a balanced mixture of positive and negative slippage is one amongst the factors that may be utilized in evaluating the efficiency and reliability of a forex broker.
It is also necessary to understand that trading orders are usually executed with none difficulties or price slips in periods when the extent of volatility is within the standard limits. For this reason, some see that the repeated delay in executing orders or executing them at prices aloof from the target levels is another indication of the shortage of integrity of the brokerage company.
It is impossible for an STP broker to supply fixed spreads 24 hours daily, 7 days per week. The forex broker is meant to extend the spread to ease the burden of risk in periods of market turmoil. However, a trader cannot trust a securities firm that increases the spread to irrational levels, as an example widening the spread to 25 pips or more when some important news is released.
The credibility of the corporate in withdrawing funds is one amongst the most factors that largely determines its reliability. Delaying the processing of payments for an extended time, the broker loses his respect and confidence within the eyes of his clients, which is why we’ll notice that companies who are keen on their reputation send withdrawn funds to their clients during a period not exceeding 4 or 5 days. Professional traders always advise their novice counterparts to begin trading with alittle capital and check out making several withdrawals to induce a feel of the reliability of the forex broker before getting involved them with large sums.
One of the foremost notable samples of this can be the choice of the Cyprus Securities and Exchange Commission (CySEC) to suspend the license of the forex broker ACFX after its clients started complaining about charging exorbitant rollover fees on oil contracts. an outsized number of Chinese customers also experienced problems processing withdrawal requests.
The reliability of a forex broker may also be judged by the efficiency of its customer support services. The brokerage firm’s keenness to unravel all problems related to the trading platform, deposits, withdrawals, or steps for verifying identity documents is an unmistakable indication of its efficiency and reliability. it’s therefore not surprising that the foremost reputable brokers within the market are those that usually provide excellent customer service.