Forex Mistake #20 – Making the Right Choice When Choosing a Broker

Why Making the Wrong Choice When Choosing a Broker could get you Broke?

Denis Waitley – an American writer – said that “there are two primary choices in life: to accept conditions as they exist or to accept the responsibility for changing them.” There are many reasons why traders lose money in the Forex market: trading without a strategy, over trade or entering the wrong side of the trade – just to name a few causes. But in order to make those mistakes you need to make a choice first and to accept the conditions as they are. Do you think that the broker you chose could get you broke? I think it can! And not because it could be a scam, but simply because it may not be suiting your needs.

 

How you can go Broke by Making that Wrong Decision?

Let me tell you a funny story. “St. Peter is welcoming a newcomer in Heaven and asks him if he wants to make a tour so he can choose the place where he wants to stay. The guy accepts and they start to walk while St. Peter is presenting how comfortable and nice is the Paradise. At a certain point, the newcomer hears some people screaming in pain and asks what’s going on. St. Peter says not to worry, it’s only other newcomers who are drilled in the back to put them wings. After a few more minutes, on another alley, other people screaming in pain. The newcomer, scared, asks St. Peter: Are you sure, we are in Heaven here? Why are these people screaming again? St. Peter answers that those people are newcomers who are drilled in their heads to put them aureoles. In that moment, the newcomer said that the made his choice and preferred to go and stay in the Hell. St. Peter: be careful what you wish because there, they will put it in your ass. The newcomer: Yes, I know that, but at least I already have the hole.There are so many good brokers trying to offer you a serene future in the Forex market and it’s only your choice if you want to have “wings” to fly or to be spanked. Choosing a broker that allows you to make a minimum deposits as low as 100$ (or less) but asks you to trade minimum 0.10 lots (10 000 units of the base currency) is like choosing the Hell because you already have the hole. See for example this How can you go broke with XForex article. A broker with a solid regulation and many years of experience seems a good choice for almost every trader. Not if that broker has higher spreads (comparable with some of his competitors) and some slippage issues and you are a scalper. See for example this FXPro review. As you can see, I am not talking about choosing scammers instead of trustful brokers but I am speaking about choosing the perfect broker for you. If you plan to trade big amounts, maybe you need some extra protection for your money and then choosing brokers like Dukascopy could mean choosing the Paradise for you.

 

The forex-learning-site.com is trying to define how the best Forex broker should be: “the best Forex broker should be regulated and ECN, offering low spread, hedging, automated trading, mobile trading and trailing stop.” You can find a lot of details and interesting stuffs on this website. There are many ECN regulated Forex brokers in the market, which offer all those things but they also have many other things that differentiate them. And those things, those details, will make you to lose money if you don’t pay attention to them and don’t weight what suits for you and what’s not. If you have confidence in your Forex broker, you will be able to devote more time and attention to analysis and developing Forex strategies.

 

 

Conclusion – Learn to Make the Right Choice

Unless you have some fetish fantasies and you intentionally chose a broker because you like to be spanked, I’d say to spend some time and confront the “details” before pushing the “open account” button. Lower spreads and being regulated is not everything that matters. The minimum position size that you can trade, the leverage or the trading platform can help you to minimize the risk of getting broke. Here are some tips for you:

  • Before analyzing the brokers, you should analyze yourself in order to know what kind of trader are you and what your needs are.
  • When considering a broker, a quick call can give you an idea of the type of customer service they provide, wait times and the representative’s ability to concisely answer to your questions.
  • The trading platform is your portal to the markets. As such, you should make sure the platform is easy to use and that allows you to implement your trading strategy as using EA or any kind of indicators that helps you in your trading.
  • If you are a trader that likes to have a wide choice of instruments to trade, having low spreads only for the majors (as many Forex brokers have) is not gonna help you, so maybe you should consider a broker that has good spreads on all the instruments even if this means a little bigger for the majors.
  • To make your research easier is not a bad idea to use professional broker reviews and Forex is why I’m broke has one of the best system to review the Forex brokers.
  • Do not rely your judgement on people’s comments about a broker, on different websites/forums, as many of them blame everything and everyone for their losses, except themselves. And is not all the time the broker’s fault.

 

Have We Saved You From Going Broke?

Tell us, did we rescued you ?

Post a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>