Choosing a broker in the FOREX market
The CIS benchmark for quality work in the FOREX market for financial services companies are the major western brokerage house. Serious investors choose their just and, above all, for reasons of reliability. In many ways, these preferences are due to psychological causes. Historically, the West (be it jeans, a bank or broker) seems to be Russian citizens who have lived for decades in an "Iron Curtain", a high-quality, reliable and prestigious. However, the failure of such giants as the American Forex Refco and Swiss Sovereign Financial Group has led many of our fellow citizens, trading international currencies, for a fresh look at the issue of choosing a broker. So what should we look for when deciding whether to initiate cooperation with one or another financial company?
Let's start with safety. Reliable financial intermediary is usually considered a broker with a long history of work, license and accountability of regulators, with the insurance industry of its responsibility to customers, streamlined system of risk management within the company, legal transparency, protection of contractual relations. The company has yet to be respectable enough, though each of us understands that term differently.
By itself, life has no guarantees: the above-mentioned major western companies have existed in the market long enough. However, the risk of losing money in the firm-lived significantly higher than that of a broker that offers our clients access to financial markets for years. The long history of work - is well-developed mechanisms of risk management (otherwise, the company would have been ruined), qualified personnel, reliable partners, financial reserves, etc. In short, the history of the company have the advantage over newcomers to the market.
Documents and regulatory bodies. Unfortunately, in practice, licenses and accountability regulatory agencies, whether government or industry, nor does it guarantee the safety of your money. However, this is serious advantage in choosing a broker.
First, the licensing process itself is cut off overt fraud. The Company shall disclose to the state of their owners, to provide statutory documents, financial statements. In addition, regulators in some form of control over operational activities, financial performance.
Secondly, there is always the organization where the client can file a complaint or claim. Thus, control of brokers in the U.S. in the Forex market deals with CFTC (Commodities Futures Trading Comission - Commission Commodity Futures Trading) - a government commission in the status of a federal agency. In England - is FSA (Financial Services Authority - Financial Services Commission). In Russia, the controlling body for leveraged transactions in the OTC market are not available. However, if the Russian deputies will present a problem, then we can assume that it will be the Federal Service for Financial Markets. Federal Financial Markets Service now monitors the activity of brokers on stock and commodity markets and derivatives market. So when choosing a broker you should pay attention to what license he has, who issued it and for how long.
In the case of a broker placing significant funds, it makes sense to ask what guarantees safety of your funds will give you a broker. In England and the United States with such guarantees can be segregated accounts and guarantee repayment of funds from the government. In the CIS countries and other non-regulated brokers reliable are interested in a particular way to address this issue. For example, certain brokers from Russia to insure our responsibility to our clients in the insurance companies "Ingosstrakh" and "Consent", respectively. However, this is not the only way to show customers its reliability. It may be, for example, guarantee a large American or European bank or some other way.
At the beginning of cooperation with some companies, it is important to pay attention to the contract that you sign and on the basis of which then have to work (God forbid sue). The contract should fully describe all material terms of your interaction with the broker on the basis of civil law.
Big companies in their activities are guided not only by the contract, but also the public regulation of transactions, conduct transactions, which are registered all the many nuances (trading conditions, types of orders, disputes, etc.). Lack of regulations should be alerted of the potential client. If you want to work with a domestic broker, and for the financial calculations you offer foreign company or even offshore - is an occasion to think about. Think about how and where they will be resolved disputes, how do you transfer the money. Accounts with foreign companies (not necessarily even offshore) may fall under "antiotmyvochnogo" companies as the CIS and abroad. Is nice, if your money is "hang" in the current account at a bank or merchant account will be blocked just because you - the citizen of Russia or other countries of the former Soviet Union? Again, interest in your payments may be sooner or later to show the tax authorities at your place of residence.
In the CIS, some brokers work on "betting" scheme, offering its clients to bet on currencies. Here it is also important to understand in advance and be prepared for the fact that in the event of a dispute, your "bets" under Russian law, transactions equal to "bet", that is, not subject to judicial protection.
Risk management. Many traders often ask, "Where does my winnings in the event of a successful transaction?". Typically, the work of all dealing centers is organized as follows: minor positions broker "takes", ie acts by the other party to the transaction, and the large transfers to a larger contractor. Thus, the client paid winnings or loss of other customers, or from his own pocket (which is, incidentally, is why a reliable broker must be a large amount of own funds, financial reserves). A large positions, typically the amount of 1 million and above, is shifted to larger parties (banks, for example). This shifting of risk is called the overlap of the net position. Often in small startups overlap is not working, and clients at risk in the event of a major win left with nothing. It is therefore important to find out politely, as organized by the procedure of risk management in the company and where the dealing center covers the net position. Of course, all the details you will not tell (it's a trade secret), but something to find out for sure will succeed. If your broker is flatly refusing to speak on this topic, it is again a reason to think - whether you need this broker.
Now about the reputation. Hard to speculate whether the company's positive reputation. And if so, on what grounds can be judged. Alas, neither the presence of prestigious awards, nor high in the ratings in this country (and not just ours) are not indicative of good reputations. This is only a question of money. But the presence of a negative reputation (defrauded customers, litigation, etc.) can be explained quite easily by using the search capabilities of the Internet and specialized forums.
Working conditions are always important. Qualitative work conditions traditionally include: accurate and competitive quotation spreads, trading with guaranteed execution of pending orders, a modern trading platform, a wide tools, interest on commercial deposit customers.
In the question it is desirable to clarify the quotes from your broker, from which he receives them. Typically, such sources may be information systems such as Reuters, Bloomberg. Remarkably, if the finance company can confirm the right of retransmission contract quotations. This means that it does not include theft. It happens that the dealing center (especially if it is Russian), receive quotes directly from its western broker. From time to time in the quotes flow from any broker happen "outliers", ie non-market transactions is clearly above or below current prices. These emissions can be very damaging to the open position of the client (for example, covering it with a big loss for the stop order). It is desirable to find a broker in the regulations or in an oral interview, as such emissions are filtered and filtered if at all, as well as regulated disputes arising from non-market prices. Reputable brokers usually void all transactions arising from the release and return losses of the loser and cheat customers profit from earned.
Spread. Usually, newcomers to the forex market when choosing a broker in the first pay attention to the magnitude of the spread. A-brokers, in turn, lured by catchy advertising clients, he says, "Once we spread on ... followed by the name of the currency pair ... by one point and below." Experienced traders know that a solid and reliable broker is unlikely to be dempingovat in this area, and not so meticulously relate to the magnitude of the spread. Although, of course, very few people like to pay more when you can pay less.
More important is the execution. Around the guaranteed execution pending orders are highly controversial. Some have argued that the brokers to ensure execution of orders, taking on more risk than the brokers who work with a slippage. Without going into the debates, I note that the guaranteed execution pending orders when dealing with a reliable dealing center - a great benefit to the client. Here is an example. Imagine that before leaving the data on unemployment in the U.S. you are distracting two identical position to buy a pair euro / dollar at 1.21 to the price of two dealing centers. One broker has guaranteed execution of pending orders, and another - no. Fearing the release of positive indicators and, consequently, the growth of the dollar, you put a stop order to the two positions at the level of, say, 1.2. After the data is that the U.S. unemployment fell much more than analysts had expected, and the rate immediately drops to 1.19, that is, to use the traders' language, "makes the two figures." In one dealing center stop order is triggered, and you commit a hundred points of loss, and in another you still have a losing position at 200 points. Moreover, it can still increase if the rate goes lower. Of course, such situations are rare, but nevertheless occur, and this may result in loss of significant (if not all) of funds. That is why the question with a guaranteed performance of pending orders is much more important matter the size of the spread.
The trading terminal and usability
Accepted standard of trading terminal for Forex brokers are:1. availability of free demo accounts (ie the possibility to train on virtual money, test the trading strategy).2. graphic support, the possibilities of technical analysis or export data to a system of technical analysis (Omega, etc.).3. operational reliability and low requirements for the user's computer and the speed of your Internet connection.
An important factor when choosing a broker is a wealth of tools that is available to trade customers of the company. It is very important to try your hand at different markets, with different instruments and conditions. Many brokers allow trading of currencies other than synthetic instruments such as contracts for difference (CFD) on U.S. and European stocks. But some companies - even in Russian stocks, world indices (Dow Jones, DAX, FTSE100, etc.), gold, oil and so on.
The important point is the interest on funds in client's trading account and the ability to sell discrete lots. Well, generally accepted standards at major Russian brokers are:1. Clock news support for customers in the terminal.2. Daily analytical market research currencies, equities, indices, metals.3. 24-hour technical support.4. The presence of a personal manager for major clients
Thus, a good broker is composed of several important elements: reliability, good trading conditions and convenience. In the CIS market is working, many companies and banks, which represent different combinations of these criteria. I hope my tips will help you decide your guide through the world of finance and avoid common mistakes when choosing a broker to market FOREX.What to look for when choosing a web brokerReliability - is the most important fact to note.Robustness include the following parameters:- How many years, this office provides.- Availability of full postal and banking details.- The license for this activity.- Conditions of protection (insurance) from ruin.- Reviews of the company (available on the forums, conferences, personal correspondence with workers and traders, etc.).What are the conditions of entry - to withdraw funds.Practice shows that enrollment at the expense of finance is much easier than finding them again. Learn how this happens in the office can be selected only at the trader make a profit, but this must still be found.The minimum amount to open a working account.Which currency pairs work.Spreads on major currency pairs.Commission for their work.Preferable to brokers with low commission (better even without it). But a small commission can also mean a corresponding quality.The software must be on the level. Rate this software can only work on a demo account in this office. Most brokers offer this service free of charge. To have something to compare to try different software.
How much does it means?One major difference between online brokers in the minimum amount that should be on your desktop account before the start of tranzokatsy.
Among the Russian centers are offices which make it possible to start working (our very poor trader) with a minimum depositeven from 1USD,100 USD,300 USD,Such firms are unlikely to derive your bets on the market. These institutions play against you by the laws of Forex. Terms of pretty tough. However, many offer good software and work with them nicely. If you can get a steady income in such places, you can safely go to a reputable broker.
In small brokers can start to work with a minimum deposit500 USD,1000 USD,2000 USD.
By the middle broker organizations include the Centers initial amount of the working accounts5000 USD,10 000 USD,20 000 USD.
Serious Russian and Western-oriented brokerage centers to a higher initial amount of25 000 USD,50 000 USD,100000 USD.
Leverage. Commission. Spread. Leverage.Leverage allowed to work on the Forex is different at different brokers. The most commonly used 100 and 200-fold from the shoulder, at least 50, 10 and 2-fold.What does this mean?When working on the Forex for profit must exploit multiple contracts 100000 USD. This amount is not lying around at everyone, rich clients are not enough, and Brokerage centers operate with a minimum percentage. Therefore, for a mass market access and provide leverage. From 1000 USD at 100 times the shoulder you are working in the same way as if you have U.S. $ 100,000. Earnings in 1000 USD per day becomes a reality. Loss on this amount is no less real.
Commission.For the services brokerage firm has to pay. The fee can be clearly expressed and disguised.The most common fee for a transaction. It is expressed in a specific amount (ie 20 USD) or under (cost-1_go 2_h points).It may also be charged separately for opening and closing.And to pay for credit when passing through the 0 hour. This is usually 10-15 USD for the standard rate.Meets the payment for the provision of information services and software.Implicit payments we make on the account holding the finance company and not getting paid for it nor any interest fees. However, in fairness it should be noted that there are points which are charged to you for finding the percentage of funds in their account.Also, there are companies that have reported that for the work they do not need to commission, and the profit they get from the spread. I can assure you that almost all companies use it, pushing spreads when opening or closing of the transaction, but prefer to keep quiet about it.
Spread.The difference in price between supply and demand is called a spread. Spread may vary from one to two points 50 to 100 points depending on market conditions.In the quiescent state of the market for small brokers spread is considered normal by 5-8 points, 3-5 points for medium to large 1-3 of Item.When you open or close a position, there are times when instead of the price visible on the screen offers more than the other worse. This is called the effect of slippage or apart of the spread. This effect is different not only in different offices but also depends on the service broker directly you at this time. The more carefully you choose the price, making the abolition of the abolition of the terms offered, the more tired of the broker, and he accordingly pushed the media, sometimes just to annoy you.
The CIS benchmark for quality work in the FOREX market for financial services companies are the major western brokerage house. Serious investors choose their just and, above all, for reasons of reliability. In many ways, these preferences are due to psychological causes. Historically, the West (be it jeans, a bank or broker) seems to be Russian citizens who have lived for decades in an "Iron Curtain", a high-quality, reliable and prestigious. However, the failure of such giants as the American Forex Refco and Swiss Sovereign Financial Group has led many of our fellow citizens, trading international currencies, for a fresh look at the issue of choosing a broker. So what should we look for when deciding whether to initiate cooperation with one or another financial company?
Let's start with safety. Reliable financial intermediary is usually considered a broker with a long history of work, license and accountability of regulators, with the insurance industry of its responsibility to customers, streamlined system of risk management within the company, legal transparency, protection of contractual relations. The company has yet to be respectable enough, though each of us understands that term differently.
By itself, life has no guarantees: the above-mentioned major western companies have existed in the market long enough. However, the risk of losing money in the firm-lived significantly higher than that of a broker that offers our clients access to financial markets for years. The long history of work - is well-developed mechanisms of risk management (otherwise, the company would have been ruined), qualified personnel, reliable partners, financial reserves, etc. In short, the history of the company have the advantage over newcomers to the market.
Documents and regulatory bodies. Unfortunately, in practice, licenses and accountability regulatory agencies, whether government or industry, nor does it guarantee the safety of your money. However, this is serious advantage in choosing a broker.
First, the licensing process itself is cut off overt fraud. The Company shall disclose to the state of their owners, to provide statutory documents, financial statements. In addition, regulators in some form of control over operational activities, financial performance.
Secondly, there is always the organization where the client can file a complaint or claim. Thus, control of brokers in the U.S. in the Forex market deals with CFTC (Commodities Futures Trading Comission - Commission Commodity Futures Trading) - a government commission in the status of a federal agency. In England - is FSA (Financial Services Authority - Financial Services Commission). In Russia, the controlling body for leveraged transactions in the OTC market are not available. However, if the Russian deputies will present a problem, then we can assume that it will be the Federal Service for Financial Markets. Federal Financial Markets Service now monitors the activity of brokers on stock and commodity markets and derivatives market. So when choosing a broker you should pay attention to what license he has, who issued it and for how long.
In the case of a broker placing significant funds, it makes sense to ask what guarantees safety of your funds will give you a broker. In England and the United States with such guarantees can be segregated accounts and guarantee repayment of funds from the government. In the CIS countries and other non-regulated brokers reliable are interested in a particular way to address this issue. For example, certain brokers from Russia to insure our responsibility to our clients in the insurance companies "Ingosstrakh" and "Consent", respectively. However, this is not the only way to show customers its reliability. It may be, for example, guarantee a large American or European bank or some other way.
At the beginning of cooperation with some companies, it is important to pay attention to the contract that you sign and on the basis of which then have to work (God forbid sue). The contract should fully describe all material terms of your interaction with the broker on the basis of civil law.
Big companies in their activities are guided not only by the contract, but also the public regulation of transactions, conduct transactions, which are registered all the many nuances (trading conditions, types of orders, disputes, etc.). Lack of regulations should be alerted of the potential client. If you want to work with a domestic broker, and for the financial calculations you offer foreign company or even offshore - is an occasion to think about. Think about how and where they will be resolved disputes, how do you transfer the money. Accounts with foreign companies (not necessarily even offshore) may fall under "antiotmyvochnogo" companies as the CIS and abroad. Is nice, if your money is "hang" in the current account at a bank or merchant account will be blocked just because you - the citizen of Russia or other countries of the former Soviet Union? Again, interest in your payments may be sooner or later to show the tax authorities at your place of residence.
In the CIS, some brokers work on "betting" scheme, offering its clients to bet on currencies. Here it is also important to understand in advance and be prepared for the fact that in the event of a dispute, your "bets" under Russian law, transactions equal to "bet", that is, not subject to judicial protection.
Risk management. Many traders often ask, "Where does my winnings in the event of a successful transaction?". Typically, the work of all dealing centers is organized as follows: minor positions broker "takes", ie acts by the other party to the transaction, and the large transfers to a larger contractor. Thus, the client paid winnings or loss of other customers, or from his own pocket (which is, incidentally, is why a reliable broker must be a large amount of own funds, financial reserves). A large positions, typically the amount of 1 million and above, is shifted to larger parties (banks, for example). This shifting of risk is called the overlap of the net position. Often in small startups overlap is not working, and clients at risk in the event of a major win left with nothing. It is therefore important to find out politely, as organized by the procedure of risk management in the company and where the dealing center covers the net position. Of course, all the details you will not tell (it's a trade secret), but something to find out for sure will succeed. If your broker is flatly refusing to speak on this topic, it is again a reason to think - whether you need this broker.
Now about the reputation. Hard to speculate whether the company's positive reputation. And if so, on what grounds can be judged. Alas, neither the presence of prestigious awards, nor high in the ratings in this country (and not just ours) are not indicative of good reputations. This is only a question of money. But the presence of a negative reputation (defrauded customers, litigation, etc.) can be explained quite easily by using the search capabilities of the Internet and specialized forums.
Working conditions are always important. Qualitative work conditions traditionally include: accurate and competitive quotation spreads, trading with guaranteed execution of pending orders, a modern trading platform, a wide tools, interest on commercial deposit customers.
In the question it is desirable to clarify the quotes from your broker, from which he receives them. Typically, such sources may be information systems such as Reuters, Bloomberg. Remarkably, if the finance company can confirm the right of retransmission contract quotations. This means that it does not include theft. It happens that the dealing center (especially if it is Russian), receive quotes directly from its western broker. From time to time in the quotes flow from any broker happen "outliers", ie non-market transactions is clearly above or below current prices. These emissions can be very damaging to the open position of the client (for example, covering it with a big loss for the stop order). It is desirable to find a broker in the regulations or in an oral interview, as such emissions are filtered and filtered if at all, as well as regulated disputes arising from non-market prices. Reputable brokers usually void all transactions arising from the release and return losses of the loser and cheat customers profit from earned.
Spread. Usually, newcomers to the forex market when choosing a broker in the first pay attention to the magnitude of the spread. A-brokers, in turn, lured by catchy advertising clients, he says, "Once we spread on ... followed by the name of the currency pair ... by one point and below." Experienced traders know that a solid and reliable broker is unlikely to be dempingovat in this area, and not so meticulously relate to the magnitude of the spread. Although, of course, very few people like to pay more when you can pay less.
More important is the execution. Around the guaranteed execution pending orders are highly controversial. Some have argued that the brokers to ensure execution of orders, taking on more risk than the brokers who work with a slippage. Without going into the debates, I note that the guaranteed execution pending orders when dealing with a reliable dealing center - a great benefit to the client. Here is an example. Imagine that before leaving the data on unemployment in the U.S. you are distracting two identical position to buy a pair euro / dollar at 1.21 to the price of two dealing centers. One broker has guaranteed execution of pending orders, and another - no. Fearing the release of positive indicators and, consequently, the growth of the dollar, you put a stop order to the two positions at the level of, say, 1.2. After the data is that the U.S. unemployment fell much more than analysts had expected, and the rate immediately drops to 1.19, that is, to use the traders' language, "makes the two figures." In one dealing center stop order is triggered, and you commit a hundred points of loss, and in another you still have a losing position at 200 points. Moreover, it can still increase if the rate goes lower. Of course, such situations are rare, but nevertheless occur, and this may result in loss of significant (if not all) of funds. That is why the question with a guaranteed performance of pending orders is much more important matter the size of the spread.
The trading terminal and usability
Accepted standard of trading terminal for Forex brokers are:1. availability of free demo accounts (ie the possibility to train on virtual money, test the trading strategy).2. graphic support, the possibilities of technical analysis or export data to a system of technical analysis (Omega, etc.).3. operational reliability and low requirements for the user's computer and the speed of your Internet connection.
An important factor when choosing a broker is a wealth of tools that is available to trade customers of the company. It is very important to try your hand at different markets, with different instruments and conditions. Many brokers allow trading of currencies other than synthetic instruments such as contracts for difference (CFD) on U.S. and European stocks. But some companies - even in Russian stocks, world indices (Dow Jones, DAX, FTSE100, etc.), gold, oil and so on.
The important point is the interest on funds in client's trading account and the ability to sell discrete lots. Well, generally accepted standards at major Russian brokers are:1. Clock news support for customers in the terminal.2. Daily analytical market research currencies, equities, indices, metals.3. 24-hour technical support.4. The presence of a personal manager for major clients
Thus, a good broker is composed of several important elements: reliability, good trading conditions and convenience. In the CIS market is working, many companies and banks, which represent different combinations of these criteria. I hope my tips will help you decide your guide through the world of finance and avoid common mistakes when choosing a broker to market FOREX.What to look for when choosing a web brokerReliability - is the most important fact to note.Robustness include the following parameters:- How many years, this office provides.- Availability of full postal and banking details.- The license for this activity.- Conditions of protection (insurance) from ruin.- Reviews of the company (available on the forums, conferences, personal correspondence with workers and traders, etc.).What are the conditions of entry - to withdraw funds.Practice shows that enrollment at the expense of finance is much easier than finding them again. Learn how this happens in the office can be selected only at the trader make a profit, but this must still be found.The minimum amount to open a working account.Which currency pairs work.Spreads on major currency pairs.Commission for their work.Preferable to brokers with low commission (better even without it). But a small commission can also mean a corresponding quality.The software must be on the level. Rate this software can only work on a demo account in this office. Most brokers offer this service free of charge. To have something to compare to try different software.
How much does it means?One major difference between online brokers in the minimum amount that should be on your desktop account before the start of tranzokatsy.
Among the Russian centers are offices which make it possible to start working (our very poor trader) with a minimum depositeven from 1USD,100 USD,300 USD,Such firms are unlikely to derive your bets on the market. These institutions play against you by the laws of Forex. Terms of pretty tough. However, many offer good software and work with them nicely. If you can get a steady income in such places, you can safely go to a reputable broker.
In small brokers can start to work with a minimum deposit500 USD,1000 USD,2000 USD.
By the middle broker organizations include the Centers initial amount of the working accounts5000 USD,10 000 USD,20 000 USD.
Serious Russian and Western-oriented brokerage centers to a higher initial amount of25 000 USD,50 000 USD,100000 USD.
Leverage. Commission. Spread. Leverage.Leverage allowed to work on the Forex is different at different brokers. The most commonly used 100 and 200-fold from the shoulder, at least 50, 10 and 2-fold.What does this mean?When working on the Forex for profit must exploit multiple contracts 100000 USD. This amount is not lying around at everyone, rich clients are not enough, and Brokerage centers operate with a minimum percentage. Therefore, for a mass market access and provide leverage. From 1000 USD at 100 times the shoulder you are working in the same way as if you have U.S. $ 100,000. Earnings in 1000 USD per day becomes a reality. Loss on this amount is no less real.
Commission.For the services brokerage firm has to pay. The fee can be clearly expressed and disguised.The most common fee for a transaction. It is expressed in a specific amount (ie 20 USD) or under (cost-1_go 2_h points).It may also be charged separately for opening and closing.And to pay for credit when passing through the 0 hour. This is usually 10-15 USD for the standard rate.Meets the payment for the provision of information services and software.Implicit payments we make on the account holding the finance company and not getting paid for it nor any interest fees. However, in fairness it should be noted that there are points which are charged to you for finding the percentage of funds in their account.Also, there are companies that have reported that for the work they do not need to commission, and the profit they get from the spread. I can assure you that almost all companies use it, pushing spreads when opening or closing of the transaction, but prefer to keep quiet about it.
Spread.The difference in price between supply and demand is called a spread. Spread may vary from one to two points 50 to 100 points depending on market conditions.In the quiescent state of the market for small brokers spread is considered normal by 5-8 points, 3-5 points for medium to large 1-3 of Item.When you open or close a position, there are times when instead of the price visible on the screen offers more than the other worse. This is called the effect of slippage or apart of the spread. This effect is different not only in different offices but also depends on the service broker directly you at this time. The more carefully you choose the price, making the abolition of the abolition of the terms offered, the more tired of the broker, and he accordingly pushed the media, sometimes just to annoy you.
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