Forex brokers - who are they? What do they do and how do they make money? Why do you need a forex-broker to participate on the currency market? What risks are associated with unverified forex companies and how traders can avoid these risks when choosing a forex broker?
Recently, access to the Forex market was limited to large corporations and wealthy people. However, with the development of Internet technology today, anyone can become a Forex trader. It requires a minimum capital of $500-1000, a little luck and an intermediary in the form of a Forex broker.
The law forbids individuals to conduct operations on the foreign exchange market.
For such operations the participation of the forex broker is required. It can be an individual or a
legal entity with a special license. Forex-broker is an intermediary between the investor and the world
of big financial operations, his activity must be regulated by the relevant governmental authorities. In
Russia, such regulator is the Central Bank of the Europe.
The regulator, including the Central
Bank of Europe, issues three types of licenses:
1. Dealer license
2. Brokerage license
3.
License for securities management on stock market.
The license is one of the most important
documents for the broker. It proves his professionalism. Doing business on the stock market without the
license is illegal. That's why a forex broker without a license from the regulator is not
trustworthy. His words and promises are an empty sound.
Working with an illegal broker is a
guaranteed way to lose money.Let us repeat once again that for greater investment security in Europe, it
is recommended to work only with licensed forex brokers. In addition, according to the law, since 2016
the provision of online trading services in our country without a permit document from the Central Bank
is basically impossible.
Let us mention four brokers, which have the right to work in the
territory of the Europe:
LLC "FINAM Forex"
LLC "VTB Capital Forex"
LLC
"Alfa Forex"
LLC "PSB Forex"
The dealer forex broker license from the
Central Bank of Europe provides five basic principles, working in the interests of investors:
1.
The "unqualified investor" provision. This means that without a broker's confirmation of
financial literacy, a trader will not have access to the market. This helps to reduce losses and improve
the overall market situation.
2. Contracting and investor identification. The purpose is to
ensure the safety of market participants.There are mechanisms for resolving disputes between
participants, with the Central Bank acting as regulator and supervisory authority.
3. Transfers
to PAMM-accounts are forbidden. Leverage limits are set to guarantee loss reduction.The full list of
acts and documents regulating the activity of brokers can be found on the official website of the
Central Bank of Russia.
Please note: despite the existence of a license from the Central Bank of
Russia, there are no absolute guarantees. The Forex sphere, even if all precautions are observed,
remains a high-risk area. Be careful.
Trading in the Forex market is carried out through special trading platforms. The most popular is considered MetaTrader 4 (MT4). It offers a wide range of functions for the trader, such as execution of operations, development of strategies, graphical analysis, use of technical indicators and automation of the process.
