Tip 1: The realities of forex brokers

The truth about no-fee forex brokers

I believe there are two types of forex brokers: those with high fees and those with low fees. In many cases, it is the clients of brokers with high fees who get the most returns on their investments.
Actually, lowering fees increases the profit a forex broker earns.
This is because setting fees to zero leads to an increase in the number of trades clients make.
A forex broker earns more if its clients make more trades.
As an example, this is just like how McDonald’s sales increase if it cuts the price of a hamburger by one-half.
The result is something like a low-margin, high-turnover approach.

To the user, it seems like reducing fees to zero would reduce the cost of trading. However, in fact that is not the case.
In many cases, elimination of fees leads to an increase in the number of trades, resulting in losses.
In today’s market, the more trades an investor makes the less likely he or she is to profit.
Why is this the case?
It is because investors tend to take irresponsible positions if they are not charged any fees.
In choosing a forex broker, the most important factor may be the dependability of its trust security system.

The falsehood behind trust security systems

A trust security system refers to keeping the money entrusted to a forex broker by its clients separate from the broker’s own funds.
However, in actuality there are many brokers that do not separate clients’ funds from their own.

Numerous brokers think of the funds entrusted by their clients as their own money.
First of all, the most important thing is to ensure that money entrusted to the broker is separated from its own funds.
Clients’ assets need fully to be stored separately from the broker’s assets, in accounts at trust banks.

While a broker that claims to offer a trust security system is required to handle clients’ funds thoroughly as described above, this does not mean that in actuality all funds entrusted with the broker are deposited in a trust bank.
If even 10% of funds entrusted by clients is covered by the trust security system, the broker may claim to provide a trust security system.

Most important is whether the firm is an honest one.
An honest broker manages its clients’ funds separately from its own, so that even if it was not placed in a trust security system the client can be sure his or her money can be returned.

Eight tips for Forex trading in Japan