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1 Сентябрь 2009

Criteria for selecting a broker on forex

Any forex broker who operates in the foreign exchange market, provides its clients with a lot of services. But it is not always the amount of services means that they are all good quality, so every trader must know some of the nuances of the broker, be able to evaluate his performance and effectiveness of services offered. Therefore, this article we will address some of the nuances involved in measuring the broker with the position of individual investors.


Reputation. Reputation, which has a Forex broker - a rather abstract concept. And if you have chosen as the defining criterion of reputation, then you will encounter some difficulties. After all, in fact you have a lot of questions. And, above all, these questions are elementary at first glance, but an answer to them is not so simply.

For example, you can ask the following questions: «Does the Forex broker you are interested in positive reputation? By what criteria can be judged that the forex broker has a reputation? »We believe that readers of this article - people are educated, so it is not necessary to explain some basic things. Numerous companies occupy high positions in various rankings, have a number of prestigious awards, but as you know, all this does not mean that a forex broker has a positive reputation. After all these places and awards - this is just a financial issue, and therefore rely on such indicators, in our view, it makes no sense.

As «tarnished reputation», then here to find out «Who is who?» Simple enough. Today there are many thematic forums, and generally places where talking the same traders. Therefore, using the Internet, you will always find reviews defrauded customers, information on the experience of litigation, etc. etc. Simply enter a search string in the name of the company and the word «guest» and search engine will give you lots of information. Just wanted to make a small reservation. Many companies have their own forums, linked to the official site and, accordingly, can edit the information on them. On this basis, decide whether or not to trust those reviews, which are available in such forums.

Terms of cooperation. This criterion, of course, also very important. Each forex broker should be considered from several positions: the accuracy of quotations, the level of spreads, accurate and timely execution of orders, availability of advanced software, the ability to receive relevant information in a timely manner, the availability of competent and loyal customer support system, the presence of a broker’s own research base with an attached staff.

Now pay attention to several questions exclusively technical nature. First of all, you have to wonder where forex broker takes information on quotes. Large companies are taking quotes from competent sources. For example, from Dow Jones, etc. By the way, all the rights to rebroadcast quotations must be documented. So you, as a potential client companies have the right to know this information and in accordance with her broker to determine the legal clarity, which are going to work. Just the fact that many of the «left» brokers steal information, which, of course, subsequently affect on such a broker to its clients.
There is another scheme by which forex broker receives the quote information. Under this scheme, forex broker enters into a contract with any broker and retransmits western quotes directly through him. So basically comes mainly Russia brokerage company.

By the way, any broker should be worked-out system of action in the event of various contingencies. It often happens that the quotes do the races, which clearly exceeds the market price. Therefore necessary to discuss such nuances in advance the broker in order to avoid unforeseen situations. Incidentally, reputable brokers such matters are resolved in favor of the client. That is, if it’s unexpected price hikes, which resulted in the client receives a loss, such transactions are void, and the amount for debt repayment broker to the client are written off by those traders who have earned this way.

Execution of warrants. This factor is very important, because of how accurately and on time will be executed the warrant, will depend on the final result of the transaction. Brokers in this regard are divided into two types. Some work with the slide, other warrants on the exact price. Therefore, currently under heated debate over whom to give preference in this case. We, from my own experience, we believe that the forex broker who executes orders at fixed prices is more reliable.

Give a concrete example. For example, in the U.S. is expected to review interest rates, according to analysts, is expected to decline. You open a short position on the dollar in two different brokerage companies, for example, at 1,5. A forex broker is working with a guaranteed execution of pending orders, the other - with sliding.

Then you put the pending orders at the level of 1,4. But after the data came out on interest rates, they found that their level was lower than anticipated. Price immediately falls to the level of 1,3. With the broker, which uses a fixed execution of orders, stop-loss is triggered at the level of 1,4. In this case, your losses will amount to 100 points. If you cooperate with a broker who works with the execution of warrants of sliding, in this case, your loss will be 200 points, and in doing so you will have more to close the position.

And given that the price will not stand still, you may lose more than 200 points, if the rate goes lower. Certainly, such events occur in the forex market is not so often, but nevertheless they do occur, so the risk of losses resulting from such events still exists. That is why the issue of enforcement of protective orders is quite acute, and even more relevant than the size of spread.