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Differences Between Reliable and Unreliable Forex Brokers

 
 
 
 
 
 
 

If you are already trading forex for a while, it is likely that you are fully aware that choosing the right broker is extremely important for long-term successful trading.

However, the fact is that there are hundreds of forex brokers around the world. The question, then, is how to recognize that your broker is most probably not providing you with the best services in your favor, or on the other hand if the broker is a fair and trustworthy partner for your forex trading.

Differences Between Reliable and Unreliable Forex Brokers

Below we have prepared a simple list of differences between poor-quality and high-quality brokers that should help you to get a better view of your current broker.

POOR-QUALITY BROKERS

HIGH-QUALITY BROKERS*

Aren't regulated by any authority

Are regulated by trustworthy authorities like CySEC, FCA, BaFin and others

Don't segregate company's funds and deposits of traders

Segregate company's funds and deposits of traders, which should secure the safety of your whole deposited amount

Place deposits of clients in partner banks and don't link them with clients’ own names

Place deposits of clients in its partner bank and link them with clients’ own names

Have slow orders execution and trading servers, the trading platform often freezes or will show requotes

You should not experience any of these with a high-quality broker

Have limits for placing orders from actual price

No limits for placing orders

Have maximum volume of orders up to 20, 50 or 100 lots only

Have maximum volume of orders up to 1000 lots

Restrict maximum deposit that you can make on a given account. In case of higher deposit, you have to switch to another account

Should have no such restrictions

Have conflicts of interests with traders and are interested in traders’ losses, which is a profit for low-quality brokers (market makers as well as some “ECN / STP” brokers)

Should have no conflicts of interests, are true ECN / STP brokers and earn profits from spreads / commissions only – are interested in long-term profitable clients

Have one or a few low-quality liquidity providers

Should have TIER1 high-quality interbank liquidity providers

Have instant – market maker – orders execution

Should have true interbank market orders execution

Have negative asymmetric slippage

Should have both positive and negative slippage (simply compare your SL / TP price and executed price in MT4's terminal)

Are widening spread often

Aren't widening spread except extreme situations in the market

Have huge financial leverage such as 1:400 or above

Have maximum financial leverage up to 1:200

Have fixed spreads

Have solely variable spreads

Guarantee limit orders

Don't guarantee limit orders as limit orders can be a subject to positive slippage in favor of traders

Offer % deposit bonuses that are not withdrawable

Don't have % deposit bonuses

Have inactivity, maintenance or data fees

Have no “unjustified” fees

* These are characteristics that quality regulated brokers could have while this may not always be the case and characteristics may vary.

We firmly believe that the list above will give you a better overview of how reliable vs. unreliable brokers should behave toward their clients.

We will be also very happy if you will share your real experience with brokers with us and help other traders in choosing the right broker for their trading.

As Purple Trading, the world's leading forex broker, we also strive to provide 100% fair forex trading services in favor of our clients and prepare a high-quality trading environment where forex traders are able to succeed in the long-term.

About the Author

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Team Purple Trading

Purple Trading is a true and 100% fair ECN / STP forex broker providing direct access to the real market. High speed orders execution, no trade-offs, no limits for any type of trading, the most advanced trading technologies. Explore more about Purple Trading at www.purple-trading.com .

For more information on the risks of trading, click here .

P.M. Purple Trading is a trade name owned and operated by L.F. Investment Limited., 11, Louki Akrita, CY-4044 Limassol, Cyprus, a licensed Cyprus Investment Firm regulated by the CySEC lic. no. 271/15.

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