Choosing Right Forex Broker to Reduce the Risk

Choosing the wrong broker makes it stressful for the rest of your life. This statement is not exaggerated at all. Because if we try to make profits through hard work but can't withdraw them when we succeed, it's sad. The news has been seen very often throughout time. I have been in the Forex industry for 7-8 years. There has never been a year when a broker cannot offer normal withdrawal service. Traders will always find this out.

It is known that in the Forex market of Thailand, there is no legal support. Only large financial institutions, such as the Bank of Thailand, are allowed to trade in the Forex market by the government. This is probably due to poor history. In addition, investing in Forex has a high risk. With a lot of money to be used (in the past), it is feared that criminals will use Forex as a way to launder money, thus Forex brokerages are not allowed in Thailand. There is a law forbidding the Ponzi scheme and raising funds for currency trading.

Examples of Forex Ponzi schemes include Forex3D with a damage value of more than 40 billion baht, etc. There are advertisements inviting investors online to go to “Forex Trading” that offer unrealistic returns through Forex3D brokers which have no license. There is no legal regulation and WikiFX has been regularly warning against it. For the past year, people who launched the fundraising are still missing, while victims are still unable to track the money.

Fiscal Policy Office(FPO) has described the laws of Thailand which the Forex Market should follow.

“Investments in Forex transactions can be done manually, but investors should be responsible for the risk of potential losses on speculating the currency exchange rates. However, at present, no license has been issued to any person to undertake business related to payment factors. Foreign countries should comply with the law on exchange rate control. Therefore, if any person is persuaded to invest in currency speculation, it is presumed that the person may be hit by a scam and suffer damages. In the event of persuading people to invest in Forex speculation, the fundraisers with no license to operate a business related to Foreign payment factors under the Exchange Control Law Such actions, no matter he or she is a natural person or a juristic person, are considered to commit fraudulent loans to the public, according to Section 4, paragraph two of the Royal Decree Fraudulent Borrowing of the People, 1984.”

Reference fpo.go.th Fiscal Policy Office (FPO)

We must understand that it's people themselves who should be responsible for the damages in the fraud of Forex brokers, because it will not be able to sue for damages in Thailand but can sue to the registered office of the broker in foreign countries.

So what is the principle of choosing a broker？ To reduce the risk at this point as much as possible.

Considering choosing a stable and worldwide accepted Forex broker with reliable license. It is therefore important to reduce such risk factors.

From my point of view, I recommend the WikiFX which has the application functionality as the criteria. It is a standard that can be examined in every topic.

There are 5 criteria for consideration.

1. Forex broker license

Forex brokers should be properly registered to be reliable and verifiable. As for foreign forex brokers with valid registration, there will be many agencies that provide protection abroad. And in the past, we rarely encountered fraudulent brokerages from those major agencies. Examples of licenses that many brokers should register because of the high reliability are as followed:

FCA license

FCA (Financial Conduct Authority), the UK

- FCA regulated brokers must have at least £1 million of working capital.

- A compensation of 50,000 pounds per account is available in the event of the broker bankruptcy.

CySEC license

CySEC (Cyprus Securities and Exchange Commission), Cyprus

- CySEC registered brokers must have a working capital of at least 750,000 EURO.

- A compensation of 20,000 EURO is paid to the account if the broker goes bankrupt.

ASIC license

ASIC (Australian Securities and Investments Commission), Australia

- A broker registered with the ASIC must have a working capital of at least £1 million.

IFSC license

- A broker registered with the IFSC must have a working capital of at least 500,000 dollars.

Actually, in different countries, there are many agencies that regulate Forex brokers. We can take a look at the WikiFX application.

Many Thai-owned Forex brokers often do not have the supervision of the agencies quoted. I would not recommend using an unlicensed broker because it is very risky.

2. Criteria for business index

Look at the systematic evaluation of the business sector, evaluate the sustainability of the company, and investigate the actual workplace of the company.

How does the company conduct business？ How long has it been open？ And does it really exist？ If we are inconvenient to travel to the brokers, we can see the application functions of the WikiFX to check brokers we are interested in. Does it really exist？ Is there a company with a real location？ It's like we went there in person.

3. Risk management criteria

The later consideration that we will have to look at is whether we are at risk of losing our investments when we use that broker. Based on news from investors who have used such brokers that we are interested in, we can see whether there is a problem or not. Are there any management systems or stable servers that allow traders to trade, or how often have you encountered problems？ Is there a miracle bar phenomenon candlestick？ If we do research and find these anomalies, there is a risk. We should avoid choosing to use it.

4. Criteria for considering software

When the broker we are interested in meets all 3 criteria mentioned above, we should consider trying out a trading program. To try opening an account. To try to see if it's stable and how well do you respond？ We may consider ourselves, or see a score of considered application function of WikiFX because they are examined by the engineers who have considered more than 20 topics to ensure the integrity of the software. Is there security in the treatment of investors or not？

5. Criteria for Supervision Inspection

Although we will check the license in the first place, we should continue to see if the broker has a license that permits full levels. There is an audit from internal affairs. Inspection of the regulator before acknowledging that broker includes how many laws are applied, and how many investors are protected. As always, we can confirm them by considering the application function of the WikiFX.

As for the above criteria regarding the selection of different brokers, the author believes that they are quite sufficient for consideration. We may delve into the details of each item or we may do so based on the WikiFX estimates which suggest that the essential determinant is the higher the better. It is reliable to consider using it.