Translated from Russian by Google Translate
1 Сентябрь 2009

Forex broker. Important nuances of selecting a mediator

When I passed basic course in the company Foreks.klub, in the literature quite often mentioned that the greatest credibility and integrity in the work plan have western brokers. And, when you consider that on the literature studied hundreds and thousands of these as I do beginners it can be concluded that in the domestic sector, the foreign exchange market the image of the western brokers elevated to the category of cult. This conclusion is reinforced by an analysis of reviews of numerous practicing traders, so the large domestic investors often give preference to Western brokerage companies.


Forex broker - a company controlled by, do not operate locally. It depends in turn on a number of financial institutions with which interacts. Therefore, if the problems start with its associated companies, they are not sidelined and the broker. By the way, as an example, a large Swiss company Sovereign Financial Group, which, despite the high degree of confidence on the part of many investors and reliable operation, went bankrupt. This led to think that even such giants Forex can not give 100% guarantee u its success.

Perhaps, it would seem that in this case is no difference what the broker to give preference - they are all at risk. Still, a major forex broker, who cherishes his name, will be more reliable for the trader who wanted to invest in the forex market, so it’s worth to pay careful attention to certain aspects of selecting a potential partner.

First of all, it is worth considering how much time working in the market you’re interested forex broker. By itself, the work on the interbank market for a long time, yet nothing said, but still from the standpoint of common sense, we can conclude that the company that operates in the market, for example, 10 years, has established a good scheme of risk management, business communications, has acquired the qualified staff and, of course, has a solid back-up facilities. This forex broker will certainly be more reassuring than the company one day.

In addition, forex broker should be evaluated from the standpoint of legal transparency, a license to conduct brokerage activities, be controlled by the national system of regulation of relations in the financial markets. Incidentally, the last point is particularly relevant.

Regarding Russia, the broker (although the stock, as well as marginal transactions in Russia under the «wing» Federal Financial Markets Service until the fall) can be evaluated more highly, if its activities are supervised by Federal Financial Markets Service (Federal Service for Financial Markets), and, if this forex broker is a member of the Financial Regulation Authority (Commission to regulate relations in the financial markets).

This situation causes us greater reliability, so I would recommend working with a broker member of the Fundamental Analysis in the first place. Of course, if the forex broker under the control of such organizations, it is quite a significant plus, but, alas, even he could not give a guarantee of 100% preservation of protecting your investment.

Incidentally, the mere fact that the company has licensed activities is more credible because the fraudsters is just clipped in this way. After all, the existence of a license to conduct brokerage activities - this is the transparency of action of the company, since its receipt is required to provide a number of documents, and follow-up activities will be supervised by the appropriate financial and regulatory authorities, which, of course, unacceptable for the «left» company.

As you may have noticed, the real control services, which would directly regulate the trade in the currency market in Russia yet. But such bodies exist in the West. In the United States every forex broker is controlled by CFTC - a government commission. In the UK, supervising the function of the FSA - special commission on services in the field of finance.

I have already mentioned above, that Russia has curtailed the monitoring function in financial markets does FSFM. Her expertise extends to the stock and commodity markets, as well as the derivatives market. Perhaps in the near future will be decided the question of expanding the powers of Federal Financial Markets Service, resulting in a domestic market segment will be controlled by this body.

As in Russia there is no special organization to regulate the foreign exchange market, then before you decide, reliable whether a forex broker, you should analyze what guarantees preservation funds may offer this forex broker. In the U.S., for example, a guarantee of return of investments are obligations of the Government.

In Russia, of course, such measures have not yet been adopted, but there are other methods guarantee security of investments. For example, many of Russia’s brokers contract with a major foreign bank, which is the guarantor of such a broker. Some of Russia’s brokers simply to liability in a variety of domestic insurance companies. Options may be many, so it is independently evaluate the reliability of the broker, depending on the assurances provided.

And finally once again remind you about such an important procedure as risk management. This concept includes a lot of different components. All relate to the risks faced by the forex broker. Every trader will sooner or later ask yourself the question: «And where do the money that I won?». Standard scheme of the broker as follows: all the small transaction broker carries out independently, but more significant was transferred to a larger counterparty (the bank, etc.). This procedure is called the overlap of the net position.

When a client wins a certain amount, then your winnings it receives any funds from the broker, or through the loss of other customers. By the way, forex broker is different from dealing center so that all transactions are not displayed on the interbank market, so dealing centers in the event of winning the customer does not pay from its own budget. Turning to the disbursements, which provides forex broker out of pocket, I would like to again remind us that here he must have certain minimum cash balance.

You, as a future client of the company should be asked what the amount is carried overlapping net position, because the small brokerage firms such a procedure is non-existent, which means you risk being left without a prize, if it would be a lot of money. All this and a risk-management, which plays an important role in assessing the potential broker.