How to choose a regular foreign exchange platform?

How to identify and choose reliable onesForex PlatformRemember these six

Today, I would like to share with you a topic that many investors often discuss, namely, how to choose a formal foreign exchange platform.

Every year, investors complain to the editor, in order to find a reliable platform, but also consulting, but also online to see word-of-mouth, a fierce operation, investment is a lot, and finally encountered the run, deck of black platform, let people have no way.

If I were to say that choosing a platform on the Internet is true or false, it is self-evident how much water there is. No matter how much others recommend, it is not as true as what you actually compare. Once you learn the method of screening platforms, "it is a donkey or a horse", you can recognize it at a glance.

So now the editor will help you interpret and screen the key elements of the foreign exchange platform from three angles to see if there are any pits you have stepped on. To sum up, you need to remember these six big characters "One look, two look, three look”。

First, check supervision: whether there is an authoritative supervision license

The first thing to look at is the regulatory information. Every regular platform must have supervision.

The particularity of the financial industry has kept it under the strictest supervision. If a foreign exchange platform does not even have regulatory information, 99.9% of it is a black platform. For a less appropriate example, this is the same as the business license required for a store.

But here I would like to remind you that the domestic regulatory policy on foreign exchange margin is not open, so if any platform is under the banner of domestic supervision, it must be a black platform.

Is it impossible for us to trade without domestic supervision? No, because foreign exchange trading is open abroad, both mainland and overseas platforms must be subject to formal foreign supervision. At present, there are four most authoritative financial regulators in the world: the UK FCA, Switzerland FINMA, the US NFA and Australia ASIC. In particular, the UK FCA is not only the earliest established and has the strongest supervision. Licensed institutions under the supervision of the FCA also enjoy the compensation guarantee of up to 50,000 pounds from the FSCS.

Therefore, when I choose a platform, I will first consider whether I am a licensee of these four regulatory agencies. If I have an FCA license, it will be a plus for me.

The method of inquiry is also very simple. For example, a platform EBC that a trading friend is very concerned about recently is the FCA licensee. If you want to verify the authenticity, first log in to the FCA official website: https://register.fca.org.uk/.

After entering the page, enter EBC or Supervisory Number: 927552 in the search bar on the left, and then select Firms.

Then we can see the official regulatory number to see all the information of the regulated company.

This method is very simple. Similarly, other platforms can use this method to access regulatory information.

Second, find an account: whether a valid segregated account has been opened

After confirming the regulatory qualifications of the platform, the next step is to determine whether the fund account opened by the platform for users is a segregated account.

This is a very delicate matter, with three main points:

1. It must be a segregated account, which has nothing to do with the operation of the company

2. Accountaccount openingThe bank must belong to the same country as the regulator.

3. It must be an account opened at a large bank or a Tier 1 bank

There are a lot of points, let's look at them one by one.

First, it must be a segregated account.

Many years ago, most accounts opened by foreign exchange platforms were mixed, with the company's operating funds and the customer's account funds being stored in one account.

The problem is that if there is a problem with the operation of the platform, it is very likely to misappropriate users' funds, or even run away directly, resulting in serious losses for many investors.

Therefore, in recent years, including the UK FCA and the Australian AISC, it has been made clear that accounts must be separated, user funds must be opened in segregated accounts, and companies have no right to access and use these funds.

For relevant information, we only need to open the official website of the foreign exchange platform and check whether there is "capital isolation" in the fund safety column.

Second, the bank where the account is opened must belong to the same country as the regulator

According to international practice, financial regulators can only supervise domestic bank accounts.

For example, if an FCA licensed institution opens an account in the UK and other countries at the same time, but allows users to deposit funds in other countries, the FCA cannot supervise the segregated account, and it cannot ensure the safety of user funds. So when checking the segregated account info of the foreign exchange platform, be sure that the opening bank of the segregated account and the regulator are in the same country.

For example, EBC is an FCA licensee, and their segregated account opening bank Barclays is a UK bank. So their segregated account is regulated by both the UK banking authority and the FCA.

Third, it must be opened at a large bank or a Tier 1 bank

Since 2015, major international banks have tightened the conditions for opening accounts on foreign exchange platforms.

Barclays, for example, must meet a deposit requirement of 3 million pounds to open a segregated account, and Barclays has always been known for its risk control, which requires seven "cross-examinations" from the time the foreign exchange platform submits the application.

Such strict conditions have deterred many foreign exchange platforms, so they have instead opened accounts at some small and medium-sized banks, second- and third-tier banks.

However, small and medium-sized banks are relatively weak in risk control and cyber risk prevention, and it is difficult to ensure the safety of user funds. For example, a platform in Cyprus in 2016 saw all the funds deposited in a secondary bank overnight because of hacking.

III. Look at the trading environment: How are deposit and withdrawal, slippage, spread, and overnight fees?

Finally, there is the transaction.

As an investor, we primarily focus on these three points:

1. Smooth deposit and withdrawal experience

2. The market is timely and stable, with little or no slippage

3. Spreads and overnight fees are relatively low

These three points do not have a clear standard, but they will directly affect our transaction costs and profits.

From the experience of the small editor for many years, the general regular platform places great emphasis on the speed of deposit and withdrawal:

Generally, the deposit will arrive in a few hours if it is fast, and only 1-3 working days if it is slow.

Withdrawal is a troublesome link that many people often encounter. High-quality platforms generally arrive in a few hours. If it is slow, it also takes 5-7 days, but usually it takes 3-5 days.

As for slippage, spreads, and overnight fees, this directly affects our transaction costs, so we need to conduct research before deciding on a platform.

I usually use the Forex eye to look at the platform's trading environment ranking, which includes a series of factors such as spreads, slippages, and market conditions, and based on the comprehensive situation, a comprehensive ranking is obtained.

For example, I am currently searching for trading environment rankings.

From the comprehensive ranking of the trading environment, EBC, XM and GAIN are firmly in the top three in the comprehensive ranking of the trading environment. So when considering the trading environment, I will give priority to choosing from these three.

In terms of sub-indicators, EBC ranks among the top three in the industry in terms of spreads, market prices and overnight interest, among which it ranks second in overnight interest discounts. XM and Jiasheng have two respectively in the top three. You can choose according to your own trading needs.

Well, today I will share it here to help traders understand the precautions for choosing a platform from three very objective angles. A brief summary is as follows:Check the license, check the account, and check the trading environment. To achieve the first two points is a reliable platform, and to achieve all three points is a very high-quality platform.On the road to trading, everyone should learn to distinguish between authenticity and authenticity. I hope today's sharing can help you.