5 Tips for Choosing a Forex Broker (Part-1)
Did you know that capital turnover in the foreign exchange market (foreign exchange ) is on average reaching $ 4 trillion per day? Great right ?This is what causes forex to become the biggest financial market in the world. Well, because there is actually no trading center specifically for forex, then you must be selective in choosing a forex broker to facilitate your trading activities.
Nowadays forex brokers are growing in number; starting from the bona fide to the “fake” , in the sense of not having an office and clear legality.The danger, which is classified as illegal, is even more intense in conducting promotions on the internet. Even though we all know that financial business / investment is one of the investment sectors that are prone to fraud. You can imagine, how risky the funds you leave to the broker are fake .
So, how exactly do you choose the right broker? Some of the things below you can make a benchmark.
1. Pay attention to regulations
In Indonesia, the term “commodity futures broker (PBK)” is officially used to replace the word forex broker , referring to Law Number 10 of 2011 concerning Amendments to Law Number 32 of 1997 concerning Commodity Futures Trading. Long, the name of the Act?
Quiet. We will not discuss the Act in detail. So you know that in Indonesia, forex trading is regulated in the Act. The subject of trading is not just forex only: there are gold, stock indices, CPO (Crude Palm Oil), olein and others.
Every PBK operating in Indonesia must have permission from a body called the Commodity Futures Trading Supervisory Agency ( Bappebti ).This body acts as a regulator and supervisor, under the Ministry of Trade of the Republic of Indonesia. So, if there is no permit from this body, it can be ascertained that the broker did not get permission to operate in Indonesia. Easy language: illegal in Indonesia.
To be more bona fide, the CPB that you will choose should also be a member of the exchange. In Indonesia there are currently two futures exchanges, namely the Indonesian Futures Exchange (BBJ) and the Indonesia Commodity and Derivatives Exchange (ICDX).
In addition, there is a futures clearing institution called the Indonesian Futures Clearing PT (KBI) which has a clearing and guarantee function, settlement of all futures contract transactions on the exchange registered by the Clearing Member.
Well, so make sure the broker you choose is registered in Bappebti, BBJ, ICDX and KBI.
2. Pay attention to the details of the trading account
Usually every forex broker has different conditions. Among others are:
- Commissions and spreads Brokers benefit from commissions, so every transaction you make must take into account the amount of the commission. A combination of commissions and spreads becomes the number of “fees” that you must spend on each transaction. So, for this transaction fee is not only seen from the commission, or spread, but the combination of both. The smaller the combination of the number of commissions and spreads the better.
- Initial Deposit Now you can trade with only $ 500 with a lot amount of 0.1. With a fixed rate of $ 1 = Rp 10,000, – meaning you can start trading with only 5 million rupiah. By Bappebti, this is called “partial account”. A more popular name is a “mini account”, even though it’s actually not “mini” because the contract size is still $ 100,000.
- Ease of deposit and withdrawal
Be careful, if there are forex brokers who seem to “hold” your funds for various reasons. There is a possibility of “something” happening to your funds. To anticipate it, make sure you make a deposit to a segregated account registered with Bappebti.
Now, in the second part, we will discuss what else you need to pay attention to before choosing a broker.