Top 10 reasons NOT to deposit with Forex brokers... unwisely
Got money & ready to deposit with a Forex broker of your choice?
Here are 10 reasons why you should NOT do that at once... right away... right now... because chances are:
That's true for 98% of traders, since they "meet" Forex brokers online and hardly ever in person.
Advice: at least call your broker to evaluate their phone support, professionalism and knowledge level. Find their address online and verify that the office exists in reality. Verify company address with registration authorities in their country. Ideally, of course, visit broker's office or representative office in person.
Do you know how your broker handles major economic news releases, and what you'd be seeing on your trading charts?
Are you familiar with slow trading sessions and active sessions your broker normally has?
Do you get many re-quotes? Unusual widening of spreads? Limited scalping opportunities? Difficulties closing trades or problems with honoring stop orders?
Advice: Test-trade on a demo as long as you need, but then test-trade live for at least 2 months with the minimum possible deposit.
Most of us think they do. Yet, we hear again and again that 95% of traders lose their money in Forex.
Advice: the very minimum deposit you've made to test-trade live trading is also going to reveal & prove your true trading skills to yourself. Smaller risks will be easier to handle and any mistake you make will also be less costly. It's a great way to confirm that you're ready for a serious investment.
Depositing with any Forex broker is quick and simple. Unfortunately, this rule does not apply to withdrawals.
It's not uncommon to hear that traders cannot withdraw money, have to wait for weeks to receive money back or are denied profit withdrawals altogether.
Advice: Try to successfully withdraw funds at least twice. Evaluate the speed of withdrawal, and the way broker honors and accepts profits you've made so far.
Starting with off-shore brokers (Cyprus, BVI, Seychelles, St.Vincent and the Grenadines etc. etc.) and ending with 80% of all other existing brokers - their business registration in the country of origin offers very limited to no protection to investors. All those status certificates, licenses and company documents shown to you, might seem like a solid foundation, but... in reality they barely have any value other that ensure that you're dealing with a registered business opposed to straight out online fraud, which is not bad by itself if you think about it. Forex has no central exchange, no central regulation and thus cannot be controlled to the full extent on the global scale.
If your broker is US, UK or Swiss based, you're covered by investor protection plans.
Advice: if you're depositing a fortune, think about dealing with a Bank. Chances are your local bank also offers Forex trading (though spreads and fees might be less competitive). If you can't trade with a bank, opt for the largest most reputable Forex broker you can find based on their years in business, regulation status and traders reviews. If you can't find such broker, don't deposit a fortune. Start small, with the very minimum deposit, trade for a while & then add on funds in stages proportional to the level of confidence gained with the broker.
Reasonable expectations should be to earn extra income trading Forex, not primary income. Top professionals can rely on earning sustainable income from Forex trading alone. In fact, few professionals will do so by trading Forex alone (Stocks, Options, Bonds, Securities etc. come to play at that point). Your experience is likely to be great for sustainable money management of average to reasonably large investment. But it's unlikely be enough to manage significant amount of funds, which bring true large income.
Advice: aim to earn extra income first. Possibly try yourself as a signal provider for others, and later a money manager who deals with high investment portfolios of own clients.
The rule of thumb: "Never trade with money you can't afford to lose". If your 6 month income has no financial impact on your current savings, then go ahead. Otherwise, the only advice is below:
Advice: don't do it.
Truly profitable masterpiece trading systems are never sold and will never be sold. If someone makes millions trading with his/her system, why even bother selling it for few hundred dollars here and there? Makes zero sense, both logical and money-wise.
Same with trading signals. Trading signals from brokers, for example, are aimed to make you trade more actively and, hopefully, more confidently. There will be ups and downs, but again, no miracle profits. Other trading signals being sold online or offered for free - all will be a part of some sort of commercial project, where project owners earn their income not by trading, but by generating trading signals. This should be clearly understood & approached accordingly. Unfortunately, many traders follow such signals and systems blindly.
Advice: don't buy trading systems or trading signals. Don't assume that free signals and systems will help you earn money either. Learn to trade yourself, develop own approach and system - it's the only way to achieve higher results.
Tell any broker that you're about to deposit, say $10,000 or more, and any broker will go above and beyond to convince you to deposit with them. After all, this is how Forex industry works - they need depositing clients. Being now a "VIP target", you'll be hearing anything and everything you want to hear (best conditions, secure accounts, lowest fees, personal money managers, free signals and training, etc. you name it) all effort will be made to convince and convert you to a client. No efforts spared.
Advice: Don't share your phone number with all Forex brokers on your list right away. Start with emails first, or you risk finding yourself talking on the phone for hours with every sales representative out there. If you're planning on a large deposit, don't reveal it, at least not the whole sum. Aim being treated as an average customer first, so that later you can compare the "upscale" services. Plus, spare yourself an ordeal to be eaten alive by hungry brokers' salesman "sharks". You've been warned.
Congratulations! You're filthy rich.
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