Online Trading is a trending business and thousand of people engage in online trading to earn passive income. There are thousands of online trading brokers on the internet that facilitate you to start trading. But are all those brokers trustworthy? Or are all those companies are Scammers? Now you have a question to find an answer before you start your online trading life. that is How to find a trustworthy trading broker?
Is Online Trading Legal?
This industry does not have a very long history. According to our studies, Pioneer of the Online Trading was the E-trade and they introduced online trading first time in 1992 to the world. With their success, other conventional broker companies welcome online trading. Therefore, still, this industry is at its young age. Therefore, there are many things to develop in this industry. With the development of information technology and wide usage of the internet, this industry was rapidly developed. Can I earn passive income by online trading? Online Trading is a legal industry. But it is something like betting. Some of the companies in this industry are trying to show trading is an investment. But it is not an investment. Investment is something that we investing money in order to get increase our wealth in the future time and thereby gain profit. It can be buying land, buy shares of a company, even higher education is an investment. But online trading is not an Investment. It is a game of betting on the short-term price changes of its instrument. If your speculation was right, you can earn a profit, if it goes wrong, you may lose everything, not only the money you financed but also your saving in your online trading account.
CFD (Contract for Differences)
It is important to have an idea about this term. This term was introduced to the world by the online trading industry. As well as the word’s meaning, You enter into an agreement with the broker to buy or sell financial instruments based on the price differences. This allows you to guess the rise or fall of the future price of trading instruments.
What are the main financial instruments that someone cans trade online?
There are several financial instruments to trade online. Here is the list of some main financial instruments trade as CFD.
Forex is the most popular trading instrument. Almost all online trading companies provide forex trading facilities to their clients. Here, in order to earn a profit, you should buy foreign exchange at a lower rate and you should sell them at a higher price. This price gap allows you to earn a profit. But, you cannot use those foreign exchanges that you buy at a lower price to use for your other purchasing purpose because you have not really bought them. On the other hand, if the price falling down than the buying price, then you will have to bear a loss. All the CFDs show a similar process as well.
If you are familiar with the stock exchange, you know what share is. Simply we can introduce share as the smallest part of a company’s capital. You can trade shares as well online. But this is not an investment in shares. In here you don’t buy physical shares. And if you want to sell, you don’t want to have physical shares. You do just buy or sell some quantity.
Commodities are also a trading instrument. There are some specific commodities which are in deal in the world market such as Crude Oil, Gold, Wheat, etc.
Indices mean stock market indices such as NASDAQ, S&P 500, VIX, etc.
ETF (Exchange trading funds) is some kind of financial instrument such as a basket of securities traded in the capital market.
Of course, there are other financial instruments too in CFD.
Also on overorbit.com : What Is Short-term Trading And What Are The Best Strategies?
How to find a trustworthy trading broker?
There are many scam trading companies as well as some reputed trading brokers. Therefore, it is very very important to do a proper research about the broker before started to work with them. The most common scamming method is misleading by fake trading advisors. Therefore, if you plan to do online trading, you must be wise enough to protect your heard-earning money from scammers. According to our examinations, there are no perfect trading brokers. Some brokers are comparatively better than other brokers. All of them have their pros and cons. But pros and cons don’t say whether it is a scammer. Here, I’m not going to discuss the pros and cons of trading brokers. Here I mention some methods to find some kind of trustworthy trading broker. But it will not be a confirmation or a guarantee that those brokers are 100% trustworthy.
What are the Regulatory bodies of the broker?
Earlier I mentioned in this blog that the online trading industry does not have a long history. Therefore, this industry does not well regulated yet. But it is being regulated slowly and smoothly. How they are regulated? They are regulated by Government and non-government regulatory bodies. There are three levels of regulatory institutes Tier 1, Tier 2 and Tier 3. You can see a list of regulatory bodies here. While Tier 1 is the top level and tier 3 is the lowest level. So, if your broker is regulated by at least one tier 1 regulatory body, that makes sense. If it is regulated by more than one tier 1 regulatory body, that’s good. If it is regulated by just tier 3 or tier 2 regulatory institutes, then sometimes there may be a hidden agenda or some issues. If the broker is not regulated at all, then don’t deal with them at all.
Read reviews about the broker
This is a very good way to get some idea about the trustworthy trading broker, even well-regulated brokers may engage in fraud activities. Mostly, SCAM victims can do nothing against the broker with the terms and conditions of the broker that sometimes we never read. In such cases, angry victims’ only option is to put a review and mention what happened to him and his experience with the broker. But here, some unprofessional clients may put bad reviews against the broker even though the fault is on the client-side as a retaliation action. Hence, don’t depend on one review. Read and scrutinize whether there are many of the same kind of bad reviews about the broker and then make your decision. No one is perfect. Therefore, even highly regulated brokers may have some bad reviews. But it does not say it is a scammer. Therefore, you have to make your own judgment on this point.
There are many user reviewing platforms. But trustpilot.com and forexpeacearmy.com are the most popular user reviewing platforms. Further, there is another kind of firm that says they help others who are victims of scams to recover their money back. These kinds of firms are also put fake bad reviews about the brokers in order to catch someone to their business. Mostly they suggest you contact someone and advice get their help to recover your lost money. And also broker firms on their side may put fake positive reviews against the bad reviews. Therefore, do a proper investigation before take your decision.
Asked from experienced person
If you have some experienced friend or a trustworthy person, then get their advice. This is a very good way to get some finding a good broker firm. Be aware of boasting people.
Stay away from bothering firms
Some scam firms try to influence you by calling repeatedly and always. They try to show that they are your friends and really think about you. Then they lead you to do the thing that they want. Therefore, be aware of such firms because a trustworthy trading broker does not want to bother you.
Check whether PayPal payments are accepted
Still, PayPal is the most trusted and highly secured online payment system in the world. They always maintain their standards in order to secure client’s money. Therefore, if you can make your deposit via PayPal, it might more secure payment system than other payment systems. However, this is not a proper way to find whether the broker is trustworthy. This is just side support.
Hope you enjoy reading this blog and get some awareness of how to find a trustworthy trading broker. So, if you think this blog helps you put your reviews and ideas in a comment section below. It may also be helped our readers to stay away from SCAMMERs.