One of the biggest decisions you’ll have to make is which exchange or broker to deposit funds with.
By Guy Avtalyon
What do you need to know before choosing a broker? A decision to choose the broker may be a nightmare for traders. If you read about them on various forums or read paid bad reviews, you can really find yourself stuck in that. One of the biggest decisions you’ll have to make is which exchange or broker to deposit funds with.
If you’re looking to buy a cryptocurrency in an ICO, the advice is to read the company’s prospectus for this information:
a) Who owns the company? A recognizable and popular owner could be a positive sign.
b) Are there other major investors who are investing in it? It’s a good indication if other famous investors want to invest in the currency.
c) Will you own a stake in the company or just currency or tokens? This distinction is important. Holding a stake means you’ll get to share in its earnings, while buying tokens simply means you’re allowed to use them, for example, like chips in a casino.
d) Is the currency already developed, or is the company looking to raise money to develop it? The further along with the product, the less risky it is.
What things you need to know before choosing a broker
Before you jump in all of this you have to check:
1) Demo Account: Before risking your own money, it is absolutely crucial you trade with a demo account. You need to know before choosing a broker if it offers a demo account Demo accounts are the best option a trader has to test a trading strategy and evaluate how they are as a trader. It might not be perfect, but it is better than the alternative of jumping straight into the deep water.
2) Accessibility: Before you sign a contract with a broker, test out their customer service and support. Are they accessible? If you have a problem whether it is technical or general, is there someone there whose only job is to provide you better service?
3) Legitimacy: It is important to check on the broker’s website for any additional financial information and statistics about the brokerage. If it is not there, check on the parent company’s site, and if you cannot locate this information, this should raise a red flag. This is information you need to know before choosing a broker.
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4) Resources: It is important to ensure that the platform competes with the market standard of including real-time charts, integrated technical analysis tools, live news, and updated market data, and sometimes support for trading systems.
5) Foundation: The number of online brokers is expanding fast, so you’ll need to check and double-check before signing anything. Particularly if it involves very large amounts of money. It is therefore important to investigate who and what is behind the brokerage and how strong its foundations are.
6) Competitive Spreads: After determining the integrity of the online broker, now you need to evaluate the quality of their offering. It is of absolute importance to find a broker with the smallest spreads. That will warrant maximum profit for you.
What else is important when picking a broker?
7) Leverage Flexibility: is one of the most important advantages of the market. But large leverage is not always the top option for all traders. The larger the leverage involves the higher risk. So if you have limited money, higher leverage will increase your opportunities, that’s sure. On the other hand, if money isn’t a problem, lower leverage is better to pick.
8) Account Types: Alike with the leverage, the type of account you choose will depend on your needs in trading. When choosing a broker, it is important it offers several types of trading accounts.
9) Lenient Margin Rules: If a brokerage has strict margin rules, you might encounter a sharp decline in one of your positions. So, before it gets a chance to recover and make you some profits, your broker can make a margin call. That can liquidate your account. This will result in great losses for you. It is important to know that broker’s margin rules are not too severe.
10) Emotionless Trading Features: You need to trade in a cold and calculated way so as not to let your emotion get the best of you. One of the guiding principles in successful trading is “Leave emotion out”. This is done by setting a broker’s trading platform and under no circumstances deviating from them. The main advice is don’t rush into it, check your broker against the above criteria, establish a trading strategy, examine the market using technical and fundamental analysis.
And experience of other traders too.