Regulatory Institutions and Reliable Brokerages

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Regulatory Institutions and Reliable Brokerages

Seventh session of Forex Training

Welcome back to Forex professional training in financial markets.

In this session we will discuss about regulatory institutions and reliable brokerages as well as terms of broker’s accounts, choosing different account types based on transaction value.

Regulators

An essential item when it comes to choosing a broker is their reputation. Regulatory organizations that provide brokers with licenses are called regulators.

The part that is linked to the stock market is controlled by the stock and bond share organizations. All public and private brokers start their work with a license supervised by this organization.

Regulatory Institutions and Reliable Brokerages - Regulations, Terms and Policy of Brokers in Stock or Forex Market

NFA, FCA, CYSEC

There are regulators all over the world who offer licenses to companies that are working within financial markets. Some examples of such companies are:

The NFA (National Futures Association), which is linked to the United States.

Regulatory Institutions and Reliable Brokerages - NFA National Futures Association Regulatory USA

The FCA (Financial Conduct Authority), which is linked to England and the European Union.

Regulatory Institutions and Reliable Brokerages - FCA Financial Conduct Authority Regulatory UK

CySEC (Cyprus Securities and Exchange Commission), which is linked to Cyprus and the European Union.

Every country has its own regulatory body and regulators’ liabilities are to provide brokers with licenses and monitor their activity.

Regulatory Institutions and Reliable Brokerages - Cyprus Securities and Exchange Commission

Regulated Brokerage

These regulators monitor transactions, trades and activities between investors and brokers to investigate any suspected regulation violation profoundly.

Some regulated brokers that have been provided with a license are FXPRO, IRONFX, HOTFOREX and ICM brokers.

More than 480 websites are working in financial markets from all around the world.

Every month some brokers are added to this list and some are removed, meaning parties must be careful and astute when choosing their brokers.

Regulatory Institutions and Reliable Brokerages - Regulation on FXPro Website - FCA

You will be able to find brokers’ license information on brokers’ website, as well as check if this information is valid.

Most websites of such organizations will display the license information on the same page of their websites

Some brokers, like IRONFX, have different regulators and that is because the number of their customers is so high. Also, as you can see, they have offices all around the world.

At the bottom of their page you can see all the different types of licenses that they require and possess.

How to Choose a Broker

In order to select the correct broker for you, there are several things to consider.

The broker must be regulated and have a valid license from their regulator or regulators.

The broker must have been active for at least 5 years, meaning they must have been actively working within the market for 5 years.

The broker must be trusted enough to leave some of your capital with them for trading.

Regulatory Institutions and Reliable Brokerages - Broker Advantages and Specifications - Customer Support Quality

The broker must have a range of customer support services available, as well as a direct phone line services so you can easily contact them.

They must have a variety of payment methods for depositing and withdrawing capital, especially those types with the lowest charge rate for customers.

They must have a very simple agreement for withdrawing capital and no withdraw-able limit.

You must make sure that you understand the terms and conditions of withdrawing money from an account with your prospective broker.

A good broker must have a platform with acceptable speed without any re-quote or price change even in highly volatile markets.

Some brokers do not permit their clients to place an order in a certain time and spot where market is highly volatile.

The broker must be honest and transparent in business, which means the broker must not have any complaints or violations against regulations for depositing profit or any other activities, they must also have a base of clients who are happy with their services.

If your broker fits all these criteria, you can safely say that you made the right choice.

Regulatory Institutions and Reliable Brokerages - Risk Disclaimer and Re-quoting Policy of Brokers

Choosing an account

Now it is time to choose the right account. There are many things to consider in choosing an account.

You have to know the minimum required deposit to open any of the provided trading accounts, as well as available lot size on the certain trading account concerning your trading method.

Regulatory Institutions and Reliable Brokerages - Specification of Trading Account Minimum Deposit

What is the highest and lowest leverage provided by the broker?

What are the available symbols from this broker?

How many and what types of trading accounts that broker offers, such as fixed accounts, floating accounts, ECN accounts, STP account or NDD accounts.

We will explore all these accounts in detail in the following courses.

Do these accounts have swap or are they swap-free?

Is the selected trading account in harmony with any trading strategies that a trader uses?

To which term is trading account attuned? Long-term, medium or short-term?

Most brokers offer services for a long- and medium-term trades; however it is essential to check before opening an account whether the broker provides services for a short-term, known as scalping, trades or not.

The account must provide hedging trade. Some trades require hedge or hedging which will lock the margin. Some brokers, when you buy and sell simultaneously, will unlock the margin, which makes it very easy for you to do other trades.

But others will lock certain amount of your margin in the hedge trades.

An account can also be chosen based upon the desired lot size of trades.

Regulatory Institutions and Reliable Brokerages - Hedging Limitations - Account Specifications and Spread amount

The first type is a Nano or Cent account in which the minimum size of a lot in trade is one over 1000 or 0.001.

As we have explained previously, when we trade with accounts with USD as a base, profit is not considerable and this will lead to having many open orders.

These accounts are suitable for those traders who like to have multiple open trades simultaneously, usually more than 100 trades. Traders normally deposit 10 to 200 dollars in these accounts.

Likewise, these accounts are beneficial for traders who would like to test certain strategies or Experts.

The second type is Micro or Mini accounts.

The lowest lot size you can trade in these accounts is 0.01 lot. They are usually convenient for beginners, and parties who would like to have trades with high PIP and do their trading with high risk.

Parties usually invest between 50 to 200 dollars in these accounts.

The third type is a standard account. Lot size starts from 0.1 lot and professional traders and investors with great deal of capital are attracted to these accounts.

The minimum amount to invest in these accounts is 1000 dollars.

That concludes this session, until next time and another session take care.

Linkages & Notices

Kindly visit 7th session: Reliable Regulatory Institutions and Trustworthy Brokerages on Financial Video Tutorial section to watch video format of Regulatory Institutions and Reliable Brokerages.

You can find Reliable Regulatory Institutions and Trustworthy Brokerages video on PForex YouTube Channel.

PForex Educational materials in text and video formats are developed by PForex Department of Education to enhance and improve investors’ knowledge and trading skills. Due to high risks and volatile fluctuations in financial markets, traders and investors must develop their trading skills and knowledge. It is strongly recommended to apply Risk and Capital Management when trading in financial markets.

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