5 features a secure Forex broker

Forex broker - an intermediary but also a partner. It is he who opens the door to our trading on the currency market. At the same time, it is an institution that stores our funds and carries out orders for their payments along with the profits generated. Even the most favorable trading conditions on the platform should not blind us when choosing. What about attractive spreads and low commissions in case we have a problem with the withdrawal of funds?

We have selected the five most important features that determine whether trading with a given broker will be safe.

Licenses and notifications

This is the most important foundation of security. The forex broker with which we plan to trade must have the appropriate permit in the form of a license. Oops, a mistake - it doesn't have to be, but it's definitely worth choosing one that has it :-). Having this license shows, above all, that the forex broker itself operates in accordance with applicable law and meets the formal and security conditions. This consists of the correct transaction process along with their security, the processing of our personal data together with documents, etc., etc., etc. The supervision itself is to ensure that everything goes properly.

It is also worth choosing a broker with a license of higher standards. Marshall Islands, Seychelles, British Virgin Islands and other small, exotic islands are areas that we should avoid - unless we are looking for a place to relax :-). Licenses from such sites do not guarantee us virtually anything, and their reputation is weak at best.

READ: TOP 5 - The most popular scams under the FOREX market

Highly trusted regulations come from areas such as Switzerland (FINMA), EU member states (ESMA), Australia (ASIC), the USA (NFA) and Hong Kong (SEC).

You may have mixed feelings about the Cyprus regulation. The tarnished opinion after the IronFX scandal left a bad taste. Since then, CySEC has made a number of key changes and has become downright ruthless for Forex brokers. The result is many penalties, suspended and revoked licenses, and high frequency of inspections.

In addition, brokers with a foreign license to be able to operate in Poland (and thus accept clients from Poland) must have a notification from the Polish Financial Supervision Authority. This is an authorization granted by KNF on the basis of the presented documents about having a license in another country, which is respected by our supervision.

Forex broker and deposit guarantee

Government guarantees are another factor that increases our sense of security and trust in given institutions (or rather in those that regulate the local market). The funds are guaranteed to be our security when the broker with whom we keep the funds suddenly "decides" to go bankrupt. Situations occur relatively rarely, but they do.

One does not need to look far for examples. January 15, 2015 and the Alpari UK broker. A guarantee fund from Great Britain was very effective in helping traders recover their funds. The refund took about a year.

The amount of funds covered by the guarantee results from the regulations of a given country. So this is a factor closely related to the previous paragraph on licensing.

CHECK: Forex brokers and overdraft protection. List of offers

Depending on the selected regulations, we decide to externally secure our funds up to a specific level.

Trader opinions

An unblemished reputation, customer appreciation and a solid brand are often a good indicator when choosing a broker (not to be confused with the actual expenditure on advertising). Positive feedback from reliable and above all experienced traders is one of the best sources of marketing. Such people are usually up to date with the global situation in the industry, they know what to look for when choosing a broker, they record regular profits and make payments.

Beware of pages with pseudo-rankings of the "best brokers" on the web. Very often they are prepared for the benefit of the website developers or paid in advance. Also, be wary of statements by anonymous and completely new message board users who praise only one company.

Capital Group

A company belonging to a powerful capital group is another factor in favor of the trader's security.

Licenses and guarantees are one thing but… Regulators carry out random and periodic inspections, so they are not able to spot all the shortcomings. Deposit guarantees are the last lifeline, but hitting such a "mine" means that we are deprived of our funds for a year or even two years before we are granted a refund. In addition, the problem comes when operating with greater capital, exceeding the guaranteed amount.

"Negative Balance Protection" - this phrase appears more and more frequently in brokers' advertising content. But is it sure it provides us with complete protection against loss? Seemingly yes. Except that it may prove to be a double-edged sword. In extreme situations, the introduced guarantee may have a significant impact on the broker's solvency. In such a situation, derogations from the protection provided may begin.

The solution to all these problems is choosing a forex broker that is part of a larger whole. This guarantees that in the event of financial problems, the parent company will support him with appropriate capital. This will prevent any disruptions in the execution of orders, payouts and image losses.

Dukascopy Europe IBS AS is an investment company registered in the European Union. The Swiss bank Dukascopy Bank SA holds 100% of its shares. It offers its customers access to Swiss Foreign Exchange Marketplace on the same terms as the clients of the parent company.

The model of order fulfillment

Trading with a broker or the market? There is no one right answer. In both cases, we can count on completely different conditions, which should be decided depending on our needs. Trading with the Market Maker broker opens up some opportunities for us, which do not always have much to do with real conditions, but can tip the scales in our favor (depending on the trader's invention). Only that it creates a risk of a conflict of interest. And this in turn can lead to problems with free trading under all conditions (depending on the broker's approach) and even problems with withdrawals (see the paragraph on traders' opinions).

Deciding to trade with the implementing broker absoluteie wszystkie market orders (STP, ECN, MTF models) there will be no problems with the payout schedule and no strategy constraints.