Let’s continue our discussion on finding a good forex broker.
Do not rush into opening a live account or “real money” account.
Ask questions to know how your funds will be handled.
You need to ask the following questions:
The forex broker should use a reputable bank. Ask who they use. Would you trust your funds with an unknown bank?
Before you deposit any funds with a forex broker, make sure it uses segregated accounts.
A segregated account is a dedicated bank account where all its customers’ money is kept completely separate from the company’s funds.
This means that they keep your money entirely separate from the broker’s money.
The main reason for segregated accounts is to prevent the broker from using YOUR funds outside of your trading account.
If a forex broker does not segregate accounts, it will be able to use customers’ funds for operational expenses. And maybe an exotic sports car (or two) for the CEO?
Or it might just use all deposited funds to buy a boatload of bitcoin and disappear.
In the past, shady brokers have used their customers’ money for their own purposes, putting this money at unnecessary risk.
You do not want your broker to use your money for the wrong purposes.
A segregated account protects your money against dishonest and fraudulent behavior from brokers.
Should a broker become bankrupt, it also ensures that they easily identified customer funds. If the forex broker’s become insolvent, your money would not be affected.
Depending on the country, regulations state that segregated accounts can’t be used to pay creditors, and customer funds must be returned to the customers.
Imagine a broker’s money and its customers’ money all mixed together. If this was the case, companies to who your broker owes money could come after your money!
Having segregated accounts ensures that customer funds will be easily identified and returned in the case of bankruptcy.
Segregated accounts between customer funds and a broker’s funds provide safety. If a broker does not use segregated funds, do not deposit your money with them.
In order to trade forex, you need to use the services of a retail forex broker.
And since you’ll be depositing your hard-earned money, you must make sure the company is legitimate.
Let’s review the questions that you should consider:
There is one last question that you should consider that’s crucial.
You want a licensed and regulated forex broker.
This topic is so important it deserves its own lesson…
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