You’ve probably heard about stock speculation or investing in stock exchange assets, right? You heard about them due to the active popularization and active advertising promoted by brokers all over the Web.
Attention! Transactions with exchange-traded assets, including speculation and investments, are considered to be high-risk transactions. Consider the probability of losing your investment and do not invest what you cannot afford to lose.
In addition, any exchange operations require a trader to have deep knowledge in the chosen area, as well as skills in risk management and management of available capital. Without those skills, you’d probably lose all your money in first deals.
Don’t trust ads. If someone promises you a guaranteed income without risk and without your participation, then most likely you have met a scammer. There is no ‘magic buttons’ or automated software which makes you money on the exchange.
1. The exchange is not available without a broker
Only a few know that without an intermediary who has the necessary licenses and permits, it is impossible to conclude any transactions on the exchange.
This intermediary or a so called licensed broker supplies traders with signals from the exchange, and also receives orders from their clients to execute transactions. The speed of order execution, the range of assets available for transactions, the relevance of the supplied signals may vary.
Even if you have the will and capital to invest and do stock speculation or even buy stocks, you cannot do this without using an intermediary – a bank or broker who will hold your money and do your orders. Therefore, it is worth choosing it very carefully, taking into account a set of factors.
2. How brokers differ from each other
Brokers work with certain exchanges and types of exchange-traded assets. For example, with the currency exchange in London or with the stock exchange in Asia. Find out in advance if the chosen broker suits your trading strategy and investment horizon.
Brokers offer different conditions for cooperation with clients (traders). Basically, this concerns spreads, commissions and additional cash fees. Deposits and withdrawals are carried out in different ways. However, a particular broker may not have a payment system that is most convenient for you. The registration process for a new member, as well as the verification process, may also differ from organization to organization.
Different brokers have different tools for market analysis and conclusion of deals, different trading terminals and auxiliary tools for technical or other types of analysis. You should check all those factors before making your first deposit. Moreover, you have to check the level of reliability and reputation of the particular broker.
3. How to check the reliability of a broker
Unfortunately, in the field of exchange transactions, there are a lot of scammers who hunt for deposits of naive users. They usually offer easy money, attractive bonuses, and unique partnerships – but it’s all bait. Remember: there is no easy money and quick profit in Forex or any other exchange.
Therefore, any information that you find on the Internet should be double-checked in several independent sources.
This applies to the date of registration of the broker, his legal address, accounts in which the company keeps money. It is important to check the availability of a license and other documents issued by the central bank or financial regulators in your country. If there is no evidence that the broker has the legal right to conduct stock transactions – this should alert you a lot.
In the case of offshore brokers, there is a risk that you will not get access to your money if the broker decides to freeze the account or manipulate the exchange signals. It is also problematic to sue a broker who is registered abroad and keeps money on offshore islands. Thus pay attention to brokers who have government licenses in your country.
Carefully study the terms of cooperation and the official information on the broker’s website. Also check its details in the registers of financial regulators. Finally, do not forget to check blacklists that include fraudulent or poor service companies.
4. Check out trading and analytics tools
The main tool for concluding exchange transactions is a trading terminal. Usually brokers use either the popular version of the trading terminal or their own software.
The choice of a trading platform and support tools available from a particular broker is an individual factor. However, we recommend that you check the availability of demo mode and ‘cent’ accounts that are suitable for novice traders. With the help of these modes, you will not lose a lot of money while learning to trade.
Some brokers offer a wide range of self-study and professional development tools. For example, expert market reviews, analytical articles, forecasts, training articles, and blogs.
5. Where can I find information about brokers?
As mentioned earlier, you can check information about the date of creation of the company, its achievements, current licenses and other documents on the official website.
However, it is worth remembering that information on official websites is an unreliable source of information. Cross-check all key information with independent sources you trust. Don’t hurry, take your time and make the right decision.
Second, you can use independent rating services. For example, international agencies that check licensed brokers with the largest number of active clients. Such ratings include companies with a large cash turnover.
An alternative source of information is independent sites with user reviews and expert reviews. On such sites, as a rule, you can find information about any, even newly registered brokers, as well as compare them with other companies. One of the sites with a broker rating and reviews is https://tradersunion.com/.
Of course, many reviews on such portals need to be double-checked, since they are written for the purpose of advertising or anti-advertising. Nevertheless, if you study a dozen reviews about one broker and recheck the information after all, you can understand how the particular broker works, how it treats its clients, what conditions it offers.