Risks of choosing a broker

There are countless recommendations online on how to choose the right Forex broker, but they mostly boil down to reviewing trading conditions and the quality of dealing services.

In fact, there's a very real way to distinguish a broker from a so-called shell company that works against its clients.

It's quite simple; checking only takes a couple of minutes, but afterward, you'll know exactly who you're dealing with and how high the risk of losing your deposit is based on the brokerage company.

Each broker has a so-called affiliate program, under which the affiliate who attracts a client receives a reward, while the trader themselves ostensibly loses nothing.

However, the key is the amount of this reward and how it is calculated.

A reputable broker pays its affiliate this reward solely from the spread, that is, from the commission they charge their clients. For example, if a client makes a 1-lot Forex trade with a spread of 2 pips ($20), the affiliate receives 30% of the spread, or in our case, $6.

Everything is fair and transparent.

Neither the trader's deposit nor the number of trades matter, only the trading volume and spread.

A dubious broker typically requires opening an account with at least $500-$1,000 to start trading with such a company. The affiliate, however, immediately receives a reward of 70-80% of the trader's deposit.

This question immediately raises suspicion, as the broker can't know in advance how the client will trade—they might withdraw their deposit the next day—but the company aims to collect at least the same amount from the new trader.

While it's certainly possible that the brokerage already has a rough idea of ​​how much each client will bring in, this doesn't inspire confidence.

It's even worse if the affiliate program stipulates that the partner receives compensation only if the withdrawal amount of the traders they referred doesn't exceed the amount of their deposits.

This means you're dealing not with a broker, but with a type of casino where the bet is on the client's loss.

As you can see, it's really simple. After reviewing the trading conditions, the main thing is to check the "Affiliate Programs" section, which will tell you how the broker makes money. If the reward includes a percentage of the spread, you can safely open an account; otherwise, think twice.

I personally recommend Alpari and Amarkets .