Broker & Trading Deals

What every trader should know about brokers

Brokers are a dime a dozen, and new ones are being added all the time. Therefore, at first glance it does not seem to be important with which broker you end up, because basically all brokers do the same.

But stop! Thinking like this is a fatal and expensive mistake, which in the worst case can cost you your entire deposit!

The broker is a very important part of success in trading. Why? We will explain it now:

1. Reliability

Anyone who entrusts money to a broker should have previously dealt with whether the respective broker is a serious trading partner at all, or whether, in the worst case, it is a scam that has only one purpose: to pull the money out of the pockets of potential customers. These black sheep among brokers do exist, and anyone who blindly trusts a reputable-looking website will quickly have lost all their money. Fortunately, we have such cases among our clients and followers only very rarely – but they still exist because people do not inform themselves beforehand.

2. Business experience of the broker

From a trusted and reputable broker that has been in business for, say, 20 years, one can easily expect professional customer and support processes. Moreover, it can be assumed that there should not be any technical glitches or the like here under normal circumstances. However, if you choose a broker that has only been around for a year, there is a greater risk that all of these things may not be working quite as smoothly yet.

This does not immediately mean that newer brokers are worse, it just means that a lot of experience and a longer business history are indications of continuity, security and professionalism. A junk broker would certainly not survive 20 years in business, because the competition is too big for that.

3. Trading costs (spreads, commissions)

Trading costs are a crucial factor for success, because they directly affect the profit or loss on the account. There are two main things that are important here:

First and foremost is the security and trustworthiness of a broker. The tightest spread is of no use in the end if you trade with a junk broker who pulls money out of people’s pockets with dubious practices.

The second factor is the actual cost. So when we talk about reputable brokers, this is where it is important to compare. Here, you should also pay attention to certain things:

Firstly, you need to think about what assets (forex, stocks, indices, crypto, etc.) you mainly trade. So if you trade mostly forex, you won’t have an advantage if your broker has great stock trading conditions. Look at what costs are specifically important to you. Most brokers in the forex and index CFD area are designed for the best possible conditions in the areas of forex, gold, oil and indices. So if you mainly want to trade stocks, you should look for alternatives here.

Secondly, the cost structures often differ between different account models of the same broker. Most often it is the case that there is an account model for a small account deposit. Here there are no commissions, but the spreads are slightly larger. Another account model is designed for larger accounts. Here, the spreads are usually very tight, but in return, the trades are subject to corresponding commissions. This is usually the case, but not always – again, compare and think carefully about what you personally need.

Again and again, there are traders who use completely wrong account models with brokers that are unsuitable for them. You no longer have to waste this money on unnecessary commissions and too large spreads – you just have to deal with the issue.

4. Trading Instruments

Some of the biggest misconceptions exist around the topic of trading instruments.

Basically, almost all brokers offer the classic asset classes such as forex, stock CFDs, commodities such as oil and gold, index CFDs and a selection of CFDs on cryptocurrencies.

5. Futures Trading

One myth we are often confronted with because people ask us about it is the topic of futures trading.

Many people think that you can’t make money in index trading unless you trade the real futures.

This is totally wrong! The main criterion for whether you can trade index CFDs just as well as futures is choosing the right broker. Of course, with index CFDs from a junk broker that has bad and delayed executions and wide spread, you are at a big disadvantage.

This is a very good example of why the choice of broker is so important. There are factually very, very good CFD brokers that offer top-notch index CFDs and that are basically not at a disadvantage compared to trading real futures. On the contrary, index CFDs often even have two decisive advantages.

Firstly, you can trade them with quite small accounts.

Secondly, you can choose the number of units much more individually and work with partial profit taking, while in futures trading you already need quite a lot of capital for a single contract.

Third: Futures are tradable only at a few brokers and also not worldwide. The U.S. broker Interactive Brokers is a leading, very professional broker offering futures trading, as well as its European white labels Banx, CapTrader or ADiF. However, access to these brokers is simply not possible in many countries around the world.

In summary: Index CFDs are by no means worse than futures – it all comes down to choosing the right broker.

6. Support

Make sure that the broker offers support in your language. This will make it much easier for you to contact the support in case of a problem. English is part of the standard of any reputable broker. Farsi is now also offered by more and more brokers, but not all.

Our Partner

Follow us

Follow us

Risk Note

Trading financial instruments carries a high level of risk and may not be suitable for all investors. This applies, in particular, to leveraged financial instruments (trading on margin). The high degree of leverage can work against you as well as for you. From a positive value development of a financial instrument in the past, no conclusion can be drawn for future benefits. Due to political, economic, or other changes or events, significant losses may occur. In addition, exchange rate fluctuations of foreign currencies can influence profits and losses. Before deciding to trade any financial instrument or making any other decision that could have a financial impact, you should carefully consider your investment objectives, level of experience, and risk appetite. You should be aware of all the risks and opportunities associated with the trading of the concerned financial instrument or with any other financial decision. Ensure that you fully understand the risks involved. The possibility exists that you could sustain a loss even in excess of your initial investment. Only invest with money you can afford to lose. If necessary, you should seek independent advice. In particular CFDs/Forex are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs/Forex work and whether you can afford to take the high risk of losing your money. Also note, at your own responsibility, whether there are any local or personal legal restrictions with regard to the trading of financial instruments. This risk notice applies in conjunction with our general terms and conditions.

© Copyright – Ali Taghikhan. All rights reserved.

This site is not part of the Facebook website, Instagram website or Meta Platforms Inc. Additionally, this site is not endorsed by Meta Platforms in any way. Facebook and Instagram are trademarks of Meta Platforms, Inc.