• Home
  • Forex For Beginners
  • Forex Brokers
    • Binary Options Brokers
  • Forex Robots
  • All Posts
  • Trading Tools
    • Economic Calendar
    • Forex Market Hours
    • Online Quotes
    • Forex Charts
    • Lot Size Calculator
    • Margin Calculator
Forex Trader Portal

Forex - Trading Strategies, Robots, Indicators, Lessons

How to choose a reliable broker? Psychological mistakes of a trader

October 11, 2024 by Michael Leave a Comment

How do traders choose a broker? What do they base their choice on? Let’s talk about the psychological mistakes that brokers use to get attention.

Today I will consider the problem of trader psychology when choosing a broker. Let’s talk about how to avoid all marketing pitfalls and increase your deposit, or at least keep it.

What does a trader face when choosing a broker?

So, when a trader decides to make money in the market, he needs an intermediary who will give him access to this market, that is, a broker. This is a difficult task for the novice and the experienced trader, because the abundance of thoughtful promises of easy enrichment, which put pressure on the most secret emotions, is simply off the charts. Here the experienced trader has a slight advantage - he is in no hurry to believe the promises, but carries out a certain check. But more on that later.

What is a trader guided by when choosing a broker?

Every novice trader is sure that he is guided by his own mind, that is, intellect, when he decides to whom to entrust his deposit. He looks at:

  • how many people are already trading with a broker - the more, the more reliable, of course;
  • how many people the broker has successfully trained;
  • which traders came from scratch and within six months increased the deposit by 10 times and took the money into management;
  • how many years this broker has been on the market, and so on.

And it may seem strange, but a novice trader manages to find positive answers to all these questions. And when this happens (that is, his rational defense is removed), he allows himself to dream.

One of the most common methods by which you can test yourself for stupidity is an “internal calculator” - as soon as you sit down to calculate how long it will take you to double … triple … a $ 100 deposit by opening a trading account with this broker and buy apartment-car-home-travel … you can congratulate yourself, you are on the “hook”.

Why do we fall for the broker’s hook?

The answer is simple, because there is no logic in pseudological promises of quick money on which one so wants to rely. And our subconscious mind knows this very well. However, the rational mind, which we are so accustomed to trust, receives thoughtful information and we force ourselves to believe (which can be called “removing the rational defense”) and turn on the same subconscious, but dreamy.

A little excursion to where it comes from. One of the strongest parts of our subconscious mind works in the comfort-discomfort mode, it has no other assessment categories. It pushes us all the time to pleasant situations and protects us from unpleasant ones. So, when parents promise us candy for washing the dishes, cleaning the room, and so on, then we are ready to perform these actions for the sake of a reward. Our subconscious mind pushes us to the pleasant, and we know what needs to be done for this first. But if we were promised a reward, we did everything, but we were not given a bonus, we, of course, are offended, we are in pain and the subconscious mind decides that this is an uncomfortable situation. However, the reward is so sweet that we continue to want it at a deep level, it is just that now there is a defense mechanism - we do not trust everyone who promises us something. And we often confuse this defense mechanism with logic and rationality, but in fact it is emotional.

Another example, when we like someone and it is mutual - we are happy. If we suddenly see that the object of our “mutual” adoration is kissing someone else or even just showing the same signs of attention as to us, then we are in pain. However, after that we do not stop falling in love, we just now check those to whom we want to open up, and the desire to receive reciprocity does not decrease, but even intensifies and accumulates precisely thanks to this protective mechanism.

Likewise, in trading - we do not get what we want for so long, that the accumulated potential of unfulfilled desires decides in favor of the broker who best guesses them. But, of course, only after we are convinced of the “logical” proofs.

How to protect yourself from your own subconscious?

It is both difficult and simple at the same time. If you are a beginner, then the likelihood that you will “behave” is too high, precisely because your subconscious mind decides for you, which has accumulated a huge potential of unfulfilled desires. Without the professional help of a psychologist, you have little chance.

My work shows that people begin to think about the psychology of trading at best after 2 years of trading and several thousand dollars of lost deposits. At first, everyone is convinced that they need strategies that lead to enrichment.

The second extreme - is newbie traders who quit their jobs and go into trading to become George Soros in half a year maximum. After I told them to find a job with a regular income and trade in their free time, they disappeared, simply because they did not receive the answer they wanted to hear. But those who listened, today manage other people’s money (I am writing these examples so that you once again look at how little real logic there is in the actions of such traders).

Now more about the methods. Consider the actions of more experienced traders - by more experienced I mean those who have already trusted brokers several times and lost several deposits. Their subconscious, not logic, has already been trained not to believe beautiful promises. When they choose a broker, after reading the promises, they boldly go to the forums and make a request, conduct a fairly serious investigation, because they want to know who they trust with their money.

Some newcomers do not go to the forums to check, simply because they are sincerely afraid of being disappointed in the company they like. Their subconscious has already drawn a picture of a fabulous future and simply does not want to destroy it - for them, destroying trust in a broker is equal to destroying a dream.

It is important to understand that a broker - is not a dream comer, but just a tool. And like everything in this world, it is not eternal and can sometimes fail. When a tool does not work well, we just change it, there is no point in repairing it in this case.

How to choose the right broker?

How not to be mistaken when choosing your broker? Here are the main points that an trader/investor should consider before entering into an agreement with a broker.

License

The most important thing that any broker should have is a license from the Central bank. This is a prerequisite, without which the broker is not entitled to conduct transactions on the exchange.

Usually, along with a broker license, the broker also receives a depository, dealer and asset management license. The Central Bank regularly checks brokers. And if it finds violations, it can revoke the license.

The broker keeps your money, the depository holds your shares. The depository often operates as a division of the broker. If the broker goes bankrupt, you can transfer your securities to the depository of another broker and not lose them.

Reliability

A broker, like any financial institution, can go bankrupt. Or lose the Central Bank license. To avoid this, contact trusted brokers. How reliable a broker is, in addition to having all licenses, can be determined using a rating. Ratings are assigned by special organizations - rating agencies. Most importantly, the more A’s in the rating, the higher the rating and the more reliable the broker.

You can also pay attention to the position of the broker on the exchange. It will show how big the broker is. Pay attention to the documents that disclose data on the volume of client operations, the number of registered and active clients.

In addition to dry numbers, you can read reviews. Look for forums and blogs where real private investors discuss brokers. Look on the Internet to see if the broker had financial difficulties or major scandals on the eve.

Commissions

Each broker offers different rates. Before opening an account, decide which one is best for you. To do this, decide for yourself which markets you plan to trade: stock, derivatives, over-the-counter or all at once. How often do you want to trade.

Rates are most often conventionally divided into those that are more suitable for beginners, those that will be convenient for more experienced and active investors, and those that are intended for very professionals or traders.

There are obligatory payments that a broker charges an investor, regardless of the volume and number of transactions, there are those that directly depend on how you behave in the market. And it happens that some kind of commission is completely absent. But in this case, you should pay attention to the rest of the terms of such a tariff, perhaps the commission for another service has been increased.

Here are the main fees

- Fee for maintaining a brokerage account

- Fee for depositary services

- Commission for transactions

- Commission for deposit and withdrawal of money

- Fee for filing applications by phone

Market availability

Explore which financial instruments and markets are available from the broker. Decide what you are mainly going to trade.

Service

In order to trade on the stock market, you need a trading terminal. Almost all major brokers now offer mobile trading applications. Demo access is often used in applications. Download and see how you are satisfied with the interface and whether it is convenient to use the service.

Ask your broker if you can deposit your account with different bank cards and withdraw to any cards. If a bank provides brokerage services, it can limit this function or add a commission.

Chat with the staff. Call tech support, write an email, or ask something in the app chat. If you are just starting to invest, you may have questions. And so you will understand in advance how the broker has built the process of communicating with clients and how quickly and efficiently the staff will be able to solve your problems.

Education

The last thing that you can additionally pay attention to is training materials. Go to the website or see if the broker maintains courses or a blog. Blog content is usually free. They will help novice investors to better understand the stock/exchange market. Courses are usually paid.

Take care, Michael

Forextraderportal.com


Liked the article? Follow our Facebook page and be the first to know!

Want to try Forex trading? Choose a reliable Forex broker Roboforex and get a 30USD bonus to start trading.

Related Posts:

  • How do Crypto Whales affect the price and why should traders monitor them?
    How do Crypto Whales affect the price and why should traders…
  • Five Signs of a Useless Forex Indicator
    Five Signs of a Useless Forex Indicator
  • Forex cent accounts - what are they and why are they needed?
    Forex cent accounts - what are they and why are they needed?
Posted in: Forex Trading Psychology Tagged: brokers
« Best Forex Robots 2021 Lesson 1 - Believe in Yourself and Change Your Life! »
← Best Forex Robots 2021
How do Crypto Whales affect the price and why should traders monitor them? →

Categories

  • Binary Options
  • Currency Pairs
  • For Traders
  • Forex for Beginners
  • Forex Indicators
  • Forex Robots
  • Forex Trading Psychology
  • Forex Trading Strategies
  • Price Action

Recommended Forex Broker

Have To Look

  • The 5 Steps to becoming a trader
  • How to install a Forex Robot?
  • The whole truth about leverage in Forex
  • What is difference between old and new pips in Forex?
  • Trading Strategies Installation Instructions
  • My VPS choice

    About This Site

    This blog mission is to teach people about Forex trading, including trading strategies, robots (EA), and indicators. We provide newcomers with lessons, reviews, tutorials, and more.

    Join us on Facebook!

    Random Posts

    • What is difference between old and new pips in Forex?
    • How To Earn On GAP’s?
    • How to Trade Ethereum (Cryptoсurrency)
    • Price Action: Support and Resistance Levels in Forex
    • Forex robot “Trio Dancer”: Profitable Market Dancer!

    Copyright © 2023 Forex Trader Portal.

    Omega WordPress Theme by ThemeHall

    Home | Forex Robots Laboratory | For copyright holders | All posts |
    Risk Warning. There is a high level of risk involved when trading leveraged products such as Forex. You should not risk more than you can afford to lose. All posts published on this portal are only recommendatory and all responsibility for decisions lies on readers.
    (c) 2015-2021 All rights reserved