Home » Learn Forex Trading » How do I know if I can trust my forex broker?

How do I know if I can trust my forex broker?

How do I know if I can trust my Forex broker?

For the most part, the steps a trader should follow in developing trust with a Forex broker are no different than the process that should be followed with any financial services company.  Your money will be held and handled by your chosen broker, so establishment of trust is of ultimate importance.

A good first step in this process is giving the company’s website a detailed review.  Look through the entire site to make sure you’ve read all available information put forth by the broker.  This will be a source of both basic and detailed information, including the company’s address, contact information and executive officers.  The website should also show how the broker is organized – as a corporation or LLC – and any regulatory or professional organizations it is a member of.

Next, cross-reference all information found on the company’s site.  Use a search engine, such as Google, to look up the broker’s name, address, executive officers, membership organizations and the like.  Also, try searching “Broker’s Name + reviews.”  You will find a variety of websites and forums that include customer reviews of the broker.  While customer reviews can be a good starting point, don’t believe everything you read.  Some customers will post very negative reviews just because they were angry, while other more positive reviews may be posted by biased parties.  Whenever possible, contact the person who submitted the review and ask follow-up questions.  Attempt to determine if the review is worth consideration.

Next, check with the National Futures Association (NFA) (http://www.nfa.futures.org) to see if they are registered with this organization.  There is little reason to deal with a broker who is not registered with the Forex industry's trade group.  

Finally, search the Better Business Bureau (http://www.bbb.org) to see if any complaints have been filed against the broker, and if so, how the broker handled resolution of the issue.

And last but not least – use common sense!  When you call the broker are you treated as if it were a legitimate and respectable company?  Do you receive legitimate correspondence – both mail and e-mail – from the broker?  Are your questions and concerns addressed appropriately?  If anything seems out of the ordinary – or “fishy” – don’t dismiss your concerns!

Ultimately, trust with your Forex broker will be established over time.  If you have a large amount of capital to invest in your trading operation it might be wise to deposit a small sum of money initially.  After time, if your broker has not given you a reason to run, you will feel more comfortable turning over your entire portfolio to them.