Choosing a Reputable Forex Broker

Most traders desiring to carry out trading activities do so through a forex broker. Acting as a negotiator between a buyer and a seller, a forex broker enables the buying and selling of currencies for the typical trader. When searching to trade the forex market, it is important to be aware of which brokers are reputable and realistic. The number of forex broker scams is astonishing. A forex broker who is reputable has mandates and procedures or services that protect the moral values of the forex market.

Reputable brokers provide protection from deceptive, scheming and abusive activities associated with selling commodities. Reputable forex brokers are registered members of Futures Commission Merchant and Retail Exchange Dealers (CFTC) and with the National Futures Association (NFA). A potential trader cannot rely on how professional a website appears. It does not insinuate or assure a reputable broker. Reputable brokers will list their (CFTC) and (NFA) membership association on their website pages and in its ?About Us? tab. Traders can also research the regulatory entities of countries that are not within the United States.

Opening an account with a broker located in a country that has minimal regulatory compliance and weak enforcement poses a greater risk. A trader dealing with a regulated broker has the recourse to contact proper jurisdiction and file a grievance to attempt resolution should a problem with the broker occur. Regional or municipal brokers may permit a trader?s attendance at trading conferences and discussion groups that help in learning trading principles. Many broker offer the software metatrader:

The interval at which a broker?s business was established adds credibility of the broker?s competence and resilience. All brokers start as new businesses, but those brokers with few or more years of establishment are less likely to be here-today-gone-tomorrow brokers that scheme fraudulently, or administer their business poorly.

Reputable forex brokers accept U.S. customers. Many international brokers choose to discontinue service to the U.S. due to stipulations that they register and comply with new CFTC leverage regulations. Leverage is financing a business?s resources with the use of a debt amount. A business with substantially greater debt than equity is evaluated as being exceedingly leveraged. The leverage limit for major currency retail customers of the U.S. is 50:1 and minor currencies are restricted at 20:1. Reduced ratios of leverage are designed to safeguard businesses and customers from unwarranted and considerable losses stemming from excessive leveraging.

What Risks Are Involved With Forex?

It is understandable that a new investor might be hesitant to jump into a new market if the risks aren’t clear.  And anyone who pushes an investment as being riskless simply isn’t telling the truth or doesn’t have a firm grasp on the market he or she is describing.  But once an investor understands how Forex investing works, there is no reason to not jump in and begin.  That is not to say, though, that the market is not without its risks.  Here are a few important risks to consider.

Not taking the time to understand the currency markets an investor begins with is probably the top mistake, with leverage issues running a close second (more on that soon).  Though several currencies are traded on the Forex market, there are really only a certain number of combinations possible.  Most are pegged to the US dollar, British pound or the Euro.  So instead of starting out with every possible combination, investors are smarter to pick a pair and stick with it – not just because one is more likely to gain real knowledge of that particular currency.  But because that strategy also helps an investor learn about Forex trading more thoroughly.

Leverage issues run a close second in terms of risk.  The beauty of the Forex market is that an investor can actually take a risk on a currency pair for less money that he has to come up with at the moment.  That is how leveraging works.  That could lead to serious payoffs for only a little down.  Or, it could lead an investor into owing far more than he has the money to cover.  Here, as anywhere, a little common sense goes a long way.

Not keeping track of records is another way that investors open themselves up to risk on the Forex market.  Tracking what you do is critical to understanding your investing pattern, risk tolerance, success ratio and other important data.  Anyone who relies solely on a “gut” feeling is opening himself up to serious risk.


Is Currency Trading Really Trading At All?

There are plenty of ways to make money, but few of them are as risky as currency trading. Unfortunately some people see it as a fast way to make a potentially large return on their cash. Perhaps this is because there are stories around of people doing just that. The only problem is the success stories are usually pretty easy to find. They hit the headlines in that area of interest precisely because those people have made a decent amount of money. You don’t tend to hear about the many people who lose their stake money on currency trades that go badly wrong.

Is currency trading that dangerous to try?

Many people who have knowledge and/or experience of the industry think it is. Forex traders, as they’re called, can get started easily and the size of the market they can get involved in is huge. It’s not uncommon for someone to become experienced in stocks and shares and then to see Forex trading as the next logical step. This is where many go wrong.

If you do dive in, make sure you only play with cash you can afford to lose

Many people who know something about the industry think the risk element here is above average. It’s easy to understand why. Currencies can change in value by the second, and even if you think you’re in a good position things can change remarkably – and worryingly – quickly. Even people with lots of knowledge about the currency markets lose money, which should be a red flag to those who are inexperienced.

Get a regulated broker

You can go online, look around and choose a Forex broker within minutes. But do you know if they are regulated or not? Choosing a regulated broker doesn’t guarantee you will make money of course, but it does put you in a stronger position. If you’re in the US you should make sure they are regulated with either the CFTC or the NFA. The CTFC is the Commodity Futures Trading Commission while the NFA is the National Futures Association.

The size of the Forex market

The US Forex market is massive when compared to the other financial markets in operation on a daily basis. Perhaps it is this that attracts the attention of other traders, but it is vitally important to make sure you don’t forget about the risks. If you value your money you should almost certainly invest it elsewhere. Going into the Forex markets with the hope of making lots of money is foolhardy. You may well end up losing a lot of cash. Many experts think currency trading is akin to gambling. There is certainly a lot of risk here but because this is a proper trading marketplace many do not realize the extent of the risk.

When you realize even the experts lose a lot of cash – and can and have lost it all – you realize just how dangerous the currency trading marketplace can be.

Why start trading with a forex demo account?

Forex demo accounts: why you need to learn to walk before you can run.


Forex trading is a pretty simple concept; you pick a currency, decide whether you think it will appreciate or depreciate against another currency, and hopefully make a profit off the trade. Even actioning the trade itself is simple – with leading software all it takes is the click of a button. But behind the act of the trade sits an almost infinite number of factors that can affect your decision of whether to buy or sell, and on what currency pair. Things like politics, economic trends, individual business decisions and even natural disasters can all have an impact on Forex trading. To be a successful trader you therefore need to be aware of how all these sorts of things work together to affect currency prices. And the best way to do that? Practice. That’s where a Forex demo account comes in.


Many leading Forex brokers offer users access to the very same software and systems that global traders use. The difference with the Forex demo account is that you don’t have to put any of your own money down in order to use the system. Leading brokers like Vantage FX will offer a Forex demo account with up to $20,000 of virtual funds to use, making it a risk-free way to learn to trade Forex.


Once you’re signed up to a Forex demo account, you’re free to do with it as you please. You can just sit back and observe how the market works, go all-in and place everything on one trade or anything in between – the choice is yours and you won’t be putting any real money at risk. The key, though, is to treat any Forex demo account as if you were dealing with your own money. If you’re reckless in your trades in a demo account, you’re setting yourself up to be susceptible to real risk if you decide to start trading with your own money. Instead, you should apply the same strategies and attitude to risk that you would if your own money was on the line. Taking this attitude will be far more beneficial for you in the long run.


To help you along in your journey towards becoming a trader, brokers offering Forex demo accounts usually also offer customer support. For beginners, having expert traders available on the other end of the line or just an email away should be something to be taken advantage of. (Of course, the broker won’t be able tell you which specific trades to go for, but they’re there to help with other information about how the system and software works). Good brokers should also have Forex education resources available through their websites. Things like forums, video tutorials, webinars and infographics are all very useful free tools for traders looking to understand how Forex trading works.


When you combine these types of resources with a free Forex demo account, you’ll find that there’s plenty of information to get you started. Pretty quickly you’ll find that strange trading terms like Pips, Leverage, Spreads and ‘Going Long’ will become very familiar. And, as with most things, the more you practice, the better results you’ll get.