Risk of choosing a broker

There are a lot of recommendations on the Internet on how to choose the right broker for Forex trading, but they all mainly come down to an overview of trading conditions and the quality of dealing services.

In fact, there is a very real way to distinguish a broker from the so-called kitchen, working against its clients.

Everything is quite simple, the verification will only take you a couple of minutes, but after that you will know exactly who you are dealing with and how high the risk of losing your deposit is by type of brokerage company.

Each of the brokers has a so-called affiliate program, and under the terms of which the partner who attracts the client receives a reward, while the trader himself does not seem to lose anything from this.

But the whole point lies in the amount of such remuneration and the procedure for calculating it.

An honest broker pays such a reward to his partner solely from the spread, that is, from the commission he takes from his client.

For example, a client made a Forex transaction of 1 lot, the spread is 2 points ($20), according to the terms, the partner receives 30% of the spread and in our case $6. Everything is fair and transparent.

In this case, neither the size of the trader’s deposit nor the number of transactions plays a role, only the trading volumes and the size of the spread.

A dubious broker - as a rule, in order to start trading with such a company you need to open an account with at least 500-1000 dollars.

And the partner immediately receives a reward in the amount of 70-80% of the trader’s deposit. This question immediately raises suspicions, because the broker cannot know in advance how the client will trade, perhaps he will withdraw his deposit in a day, but the company aims to receive from the coming trader an amount at least equal to his deposit.

Of course, one can assume that the brokerage company already knows approximately how much each client will bring it, but this does not inspire confidence.

The situation is even worse if the conditions of the affiliate program stipulate that the partner receives a reward only if the amount of withdrawn funds of the traders he attracted does not exceed the amount of replenished deposits.

That is, you are not faced with a broker, but with one of the types of casinos in which the bet is made on the client’s loss.

As you can see, everything is really simple, the main thing is, after familiarizing yourself with the trading conditions, look into the “Affiliate Programs” section, thanks to which you will find out how the broker makes money.

If the reward includes a percentage of the spread, you can safely open an account, otherwise you should think twice. I can personally recommend the companies Alpari and Amarkets .