One of the reasons why so many people begin investing in currencies, that is to say Forex, is because of the huge profits which can be made through a minimal investment. It’s all about leverage which can work to your advantage if the market is working with you; but when it moves against you? You could lose just as easily. This is why it is always suggested that you choose the right Forex broker who has built in protections so that you don’t lose more than you bargained for. Here are some tips on finding the right brokerage to help you kick start your ‘career’ in Forex investing.
The First Question – Is the Broker Regulated?
One of the complaints many people have had over the years is the fact that there are few regulations regarding Forex trading. Even though some governments are stricter than others in their respective countries, you will find that somehow Forex can slip through the legal cracks. This is both a pro and a con. However, the first thing you should be aware of is whether or not the country you live in and intend to trade from has regulations. It is always up to you to make the final decision as to which broker you want to place your investment with, but a word to the wise would be to choose one that gladly says they are regulated by the financial authorities in their country of operation.
Does the Broker Offer Managed Trading?
Some beginning Forex traders like the fact that there are such things as managed Forex accounts. These are great for those just wanting to get their feet wet in the market but aren’t sure how to begin and what currency pairs they should be investing in. A managed Forex trading account enables you to place your money in an account and still have full control over it but a fund manager will do the actual trading for you based on years of experience in the market. For example, Synergy FX in Australia is highly visible (transparent) within the community and has the option to open managed accounts.
What Protection Are You Given to Mitigate Losses?
As recently as January of 2015 the Forex market learned that it can be quite easy to go into a negative balance with their brokers, owing more than their original investment. Black Thursday showed that you can lose more than the money you began with and actually end up owing your broker more than you bargained for because of a ‘negative balance.’ Remember, you can lose by a great a profit margin as you can gain on so it is possible to go into the negative. Always choose a broker with negative balance forgiveness so that in the event of another Black Swan event you will not end up owing more than you started with.
These are just three of the things to look for in a broker, but a good place to start when looking for one you can trust to help make the most of your investment capital while offering built in safeguards to protect you. It is up to you to choose whether or not to open a managed account but by all means, choose a reputable broker.
