Beginning traders often ask us how to choose a legit forex broker. In this regard, we have a few tips.
Choose a good reputation (check reviews), big broker in your country. In case of a legal dispute you always have a chance and it’s easier.
It has been widely agreed that the best trading brokers are big companies from USA, France, UK, Germany, Denmark, Switzerland – this is because these countries have well regulated financial regulations. Big brokers from Australia and Japan are also considered noteworthy.
In my personal opinion, I would avoid small countries, their financial regulations may be worse and enforcing these rights may be problematic. In case of a legal dispute – you will lose the case with a very high probability. This is not the case in every instance, don’t get me wrong, but the probability is higher.
How to check if your forex broker is legit?
Well-regulated countries require brokers to be licensed, some kind of authorised. You can check this, the information should be publicly available in the relevant registries. For example, in the US it is the FDA, in the UK it is FCA, in Australia ASIC, etc.
Definitely avoid brokers from countries with no, weak or questionable regulations, avoid so called tax heavens. Many times I have heard stories about how brokers from tax havens disappear with clients’ money. This was, is and will be the case as long as they find clients willing to deposit money to an unknown company. Do not!
A guide to choose a forex broker. Additional notes.
If you still have any doubts add an additional condition – the trading broker must have been in business for more than 10 years. In well-regulated countries you can check whether the company has existed, for how long and what it does. Just check the companies register.
How do I find a legit forex broker – summary.
You should choose the best, big brokers with good reputation, from countries with good financial regulations and efficient law enforcement agencies. There are a lot of good brokers out there, there really is something to choose from and there is no point in taking any chances. Don’t just go by price/commissions/lever!
That’s it, should help in most cases.