Before you start trading in FOREX, commodities, and other OTC markets it is advisable to carefully consider offers available on the retail brokerage market in order to secure the most reliable conditions, and before depositing your funds. Your trusted broker should offer competitive trading conditions and at the same time a satisfying level of security for your money. Before opening an account we would suggest that you ask the potential broker the following questions:
1. Where is the company registered? Who controls the activities of your broker?
Is the person you are talking to offering you his own services or is it just an introducing broker. It is important in a situation when the firm you are going to sign a contract with may default. Is your money protected by the European Union or US law? Is your potential broker licensed in the EU or USA, or is it just working on some off-shore scheme?
2. How long would it take to deposit and withdraw your funds?
Usually, it takes less time to deposit the money than to get it back. How much do you need to pay to get your money back?
3. Is your deposit going to be safe?
The best protection for your funds on international markets is a warranty given by an Intermarket Guarantee Fund according to European Law rules. You should expect this level of security.
4. Are the conditions of trading on the demo platform similar to a real platform?
What guarantee do you have that the level of services offered is the same as in a demo account? What are the differences? Does the agreement provide you with the trading terms you expect?
5. Is the spread value constant or not?
Remember that an attractive level of quotes can be maintained by a broker only for a short period of time during a day.
6. What are the hidden costs you are charged for using the account?
Usually opening an account is free, to provide encouragement. Make sure that using it doesn’t produce any unexpected costs. Ask about the swap points table. Maintaining open positions overnight may produce additional costs or profits depending on the type of market, the position held in that market, and the exchange rate.
7. Can you stop using your account for a period of time?
Sometimes you would like to go on vacation, take a break from the market or just don’t have time, and you expect your money left on a broker’s account to be safe. Unfortunately, some brokers require you to pay punitive fees for a lack of transactions within 30-60 days. This can be as high as 100 – 120 USD. You should have the freedom to make your transactions as rarely or as often as you wish.
8. Does the broker take any commission from transactions?
Seemingly attractive conditions may prove to be only a publicity stunt. It may turn out that you have to add a commission to the rate for the opening and closing of a position. This may cost as much as 12 USD for one contract. Remember to ask about this.
9. What are the qualifications of the people you talk to?
Ask your broker about the positions held and experience with the currency market of the employees you are in contact with. Can you visit the office of the company? Do it and evaluate it personally. Is contact with Customer Service always possible?