A trading broker enables you to access the financial markets that you wish to trade allowing you to buy or sell when you feel its the right time to trade.
You deposit your money (trading capital) withyour broker and you should have sufficient funds in your trading account to put up as margin for the trades you take.
With your capital at risk, it is therefore very important to choose your trading broker carefully. There are many factors to consider when deciding the right broker for you.
There are hundreds if not thousands of firms that act as brokers and while some are regulated and reputable , there are plenty that are not to be trusted because of their poor practices or because they are not regulated at all. The things to take into consideration when choosing a broker include:
1) Regulation - Ideally your broker must be regulated by the relevant authority in your country of residence. In the U.K for example you may want to trade with a broker that's regulated by the Financial Conduct Authority. Such a broker is likely to be trustworthy and can be sanctioned by the FCA if they break any rules or are found to have any malpractices.
2) Segregation of trading funds - The good brokers keep traders' deposits in accounts seperate from their other activities meaning you will get your deposit/capital back in the event that the broker stops being functional. Brokers that protect traders' capital typically make this clear to their trading clients but it is important check before signing up with a trading services provider.
3) You should be able to transfer money between your trading account and bank account with ease. With most brokers a transfer of funds from your bank account to your trading is instant and a transfer from a trading account to a bank account can take between 1 to 5 days. Some brokers can do an instant transfer for a small fee.
4) Client support - The best brokers offer telephone support 24 hours during trading days. This means that if you have any problems with placing your orders on your online trading platform you can place orders over the phone. The good brokers also offer technical support for chart related queries as well as help with depositing and withdrawing funds.
So the important factors to consider when choosing a broker is whether they are regulated by the relevant authority in your country of residence, deposit protection, ease of transfer of funds when needed and the client support services offered.
Disclaimer – Futures, CFD, Margined Foreign Exchange trading, Warrants, Options and Spread Betting all carry a high level of risk to your capital. Only speculate with money you can afford to lose. Futures, CFD, Margined Foreign Exchange trading and Spread Betting may not be suitable for all customers, therefore ensure you fully understand the risks involved and seek independent financial advice if necessary.
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