There is move to regulate foreign currency traders. Unfortunately, not all in the industry are registered. Not entirely illegal, many unregistered brokers populate the financial markets.  Extra precaution is suggested for individuals and companies when they deal with forex brokers.

The United States has passed a federal law, the Commodity Futures Modernization Act of 2000 that gives authority to the commission to investigate suspicions of frauds in the transactions.

Frauds in Forex trading have telltale signs and you must be aware of these. Be wary of schemes that offer quick riches.  An experienced Forex brokers will tell you currency trading is not a risk free business and only those with real analytical methods can succeed in the field. And, even when projections seem sound, there is no way of telling exactly how strong a currency will hold out against many factors. So watch out for those who promise large profits no matter the economic condition is.

Most brokers ask for margin investments. If you are not fully aware of how this works, do not venture into it. You may be losing s more than you earn in the long run. Beware also of the “interbank market” service that brokers may offer. In reality, only large banks, corporations and investment institutions have access to this loose network of currency traders.

To be sure about the credibility of the brokers you are getting, study their profiles and company background seriously and extensively. Stick with a shortlist of firms that are registered with the regulatory commission on commodity futures.

What forex brokers offer automated services?

GFT Forex is an automated forex broker, whose DealBook FX 2 software offers the investor both a demo and a live forex trading tool in the currency market. This forex trading software offers the investor direct access to some of the tightest spreads, through a stable, standalone forex trading platform, 24 hours a day.

The DealBook FX 2 software shows live, dealable prices, real time data, free real time world and financial news, forex charts, more than 65 technical indicators, and the ability to build the investor’s own indicators.

GCI Financial Ltd., another automated forex broker, provides trading software that tracks real time prices in 20 major currencies, live charts, and real time profit and loss account tracking. The software is offered as a demo also. Market orders are confirmed within seconds at prices clicked on or accepted by the client.

The FX3K is an online automated dealing and trading platform used by automated forex brokers. The FX3K online trading environment includes real time quotes, charting, technical analysis tools, and news. FX3K integrates the client, dealer, back office and system administrator functions. Product features include high speed execution of client orders and the ability to monitor real time margin availability, net exposure and profit and loss on all open positions. FX3K has chat options to allow trader-dealer conversations.

The COESfx Level 1 Trading Platform is used by automated forex broker as an Electronic Currency Network for the execution of best prices for buyers and sellers of foreign exchange. It offers traders live and executable prices, thereby making each participant a market maker. Traders gain access to “best bid/best offer” quotes directly from price providers and other traders. COESfx pricing is derived from a number of partners in the network such as banks, Futures Commission Merchants (FCM’s), Introducing Brokers (IB’s), fund managers and other traders on its Electronic Currency Network.

A stock broker must be qualified to sell equities.  In order to be certified the stock broker must be educated and pass state administered tests.  Aside from the basic minimum qualifications a stock broker has a track record in his or her handling of stock portfolios.

A smart investor will ask the potential stock broker about his accounts for the past five years.  Questions that require the stock broker candidate to discuss their investment strategy.  What stock picks has he or she made that turned a profit. What stock picks did not show gains, but losses.
If the stock broker works for a brokerage house and most do, ask about the clients of the firm.

The stock broker is like any professional you would hire to perform a service. You are interviewing a candidate who will not only advise you on stocks and other investments, but someone who will take your personal welfare above all other considerations. Have a discussion with several candidates on the phone. The next step is to come up with a short list and have a personal meeting with the candidate stock broker.

There are regulations and government entities that regulate stock brokers in every state. There is arbitration remedies for damages you may incur if the stock broker has acted negligently in the handling of your account.  These are bottom line safeguards. You want to pick someone who will never place you in that position.

In your selection process for a stock broker keep in mind the following points:

- A referral from a friend for a stock broker is useful, but not the final word.

- Hiring a friend that is a stock broker can be problematic if a disagreement occurs.

- From the first contact with the stock broker does he or she act attentive and return calls.

- Does the candidate stock broker ask you about your comfort level in investing.

- Does the candidate stock broker provide you with insight into his or her investment strategy.

- Does the candidate stock broker’s investment strategy coincide with your ideas about investing.

- Ask the stock broker candidate to explain limit orders and other means of protecting your investment.

Is the candidate stock broker forthright in telling you of in-house stock portfolios. Many brokerage houses have baskets of stocks they promote under the firms name. How has the firm’s stock package done over the past four quarters.

When the candidate stock broker is speaking to you does he or she gloss over information or do you get the impression it is a sales pitch. Every stock broker is a sales person, but there are limits in this field.

Finally, never make a decision on the spot. After your meeting face-to-face go home or back to your office and consider your choices. Pay particular attention to your gut reaction after you have left the meeting.  Is this someone you trust to carry out your wishes and provide you with sound investment choices.