Legitimate forex brokers

In my search for a legitimate forex broker I have come to the conclusion that there is probably no such thing, at least not if looking for a forex broker that provides a facility where you can trade without having to experience any of the risk elements that make forex trading what it is; and that is usually what we mean by “legitimate” forex brokers. We read so much about scam brokers that we think there must be legitimate brokers who don’t do any of the things we’re reading about on forex message boards.

I keep hearing words like slippage, stop hunting, spread manipulation being thrown around, with traders who have lost money attributing their losses to forex brokers who committed these abominable crimes. But from what I’ve been able to discern thus far in my preparation to become a live trader, it would seem that no broker can exactly provide the kind of fail-safe trading environment that little traders like us are searching for.

I am by no means an expert and my thoughts are being shared only as an expression of my observations and openly sharing my effort to figure this whole thing out for myself. That said, it almost seems as if slippage and stop-hunting are both par for the course. As for the issue of spread manipulation, the brokers promising tight spreads are really not any different from the ones who don’t make such a promise. They are all in this for the same reason as you – to make money; and you are their money source; so even if they provide tight spreads they will find one way or another to get the money they want from you.

Let’s not forget that even if brokers are supposed to work to help us profit from our investments, we still have to pay them for that service. So you’re not going to find a broker anywhere that makes no money off of you. The question is, how does your broker make money off of you? Whatever they are promising, at the end of the day you need to figure out how they get paid and how much. That’s just standard isn’t it? Shouldn’t you know how much it costs to use a service? Isn’t this an important consideration when deciding which service to use?

Real forex scams are cases of outright rip offs like the one staged by Udo Rotmistrenko who took money from people and used it to pay for his personal and business expenses. Forex scams are common and are cases of people being out to take your money and run. And don’t think that just because a company is registered with the NFA and regulated by the CFTC they are legitimate because Udo Rotmistrenko would have been considered legitimate in that case. Many scammers go through all the motions necessary to make themselves look like a legitimate enterprise.

The best you can do is invest the time to do what you’re doing now: research. What you’ll probably find is that it’s next to impossible to find solid information about any company out there. If you find a glowing report about a company you can’t be sure if it was written by someone from that company because someone always chimes in and raises that point. The message boards are filled with discussions that veer off into name calling and representatives from different firms trying to discredit each other. It is quite disheartening; because all you’re trying to do is find a broker where you’ll have at least a fair shot at making some money. Even if you lose your money, you want to know you lost it honestly.

But that’s just the problem as far as I can see. If you lose your money because of slippage, wide spreads, stop hunting and the like, you can’t really say you lost your money dishonestly. These are not dishonest tactics. They appear to come with the territory. When it comes right down to it, you essentially have to go ahead and take a chance on one broker or another. There is no list of legitimate forex brokers that you’re going to find anywhere that will contain names of brokers you won’t find some negative discussion about somewhere on the Internet.

In making a decision which broker to chose, here are some of the points I am looking at:

  1. How long has the company been in business?
  2. How big is the company’s customer base?
  3. Is the company meeting CFTC capital requirements?
  4. What is the company’s adjusted net capital?
  5. How well known is the company name?
  6. Is the company an LLC or a coporation? (A company with enough money to become a corporation that chooses to remain a Limited Liability Corporation might be run by individuals who want to make sure that at the end of the day, no matter what happens to you and your money, they end up financially safe and secure.)
  7. Has the company been the subject of any NFA regulatory actions? If so, how many and what is the nature of these actions?

Not that any of these points guarantee a company’s legitimacy; but at this point you’re taking chances so your primary concern is to be dealing with an established company that is well-funded and not hungry or greedy for every $300 they can get their hands on. Whatever company you choose, do so fully knowing that you’re taking a chance and have no guarantees.

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