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How to check the reliability of the broker with Elder's criteria

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According to A. Elder, there are only three main criteria to become a successful trader: financial management, the ability to use technical indicators, and emotional foundations of trading. However, it is clear that these criteria should include one more: the reliability of the broker. Practice shows winning money from a broker and withdrawing it are not the same thing. So how do you check the reliability of the broker and how do you verify that reliability?

It is not possible to check the reliability of the broker using Elder’s main criteria.

On the Internet, you can find a huge variety of criteria explaining how to check the reliability of the broker. These criteria include the following:

• Experience of the broker in the financial markets
• License regulation of the broker
• The presence of foreign affiliates
• Leadership position in the rankings of reliability and numerous positive reviews of experts
• Positive feedback from ordinary traders in forums
• Terms of trade, the presence of a large number of trading assets and commissions
• Choice of technical indicators
• Reputation of the bank that opened an account for the broker

Maybe these criteria can help verify the broker’s reliability, and even make money, but does it matter if the broker just won’t let you withdraw that money?

Trading, as well as any other business, is always improving. Therefore, a broker that was an unquestionable leader in the industry, tomorrow can become bankrupt or lose its licenses. If the broker refuses to allow money withdraws, this would kill all of its numerous advantages.

If you are not able to verify the company’s profit and loss statement, can you be sure the company that has worked for 40 years won’t splurge on the 41st? For example, American broker, Refco, with 35 years of experience, used fake financial statements to successfully hide 430 million dollars debt because of the inability to check the documentation.

None of the brokers allow verification of financial statements. Moreover, the requirement to pay legally earned profit can turn against the trader. The broker can sue the trader for "fraud" or "market manipulation." Are you willing to defend yourself in court? Or is it much easier to approach the selection of a broker and to check its reliability more responsibly from the beginning?

"Independent" reviews and ratings of reliability also can hardly be trusted. How can you verify who writes these reviews. Are they "real" traders or copywriters hired to improve the reliability of the broker?

So, how do you check the reliability of the broker? How do you not fall into the trap organized by brokers’ PR managers?

I have some ideas. See if you agree.

First, pay attention to the following:
• When the broker company was founded
• Availability of license. British and American regulators inspect brokers most strictly, so a license from one of these countries increases the likely reliability of the broker, as does highly rated licenses, such as SIPC, NFA, and SEC.
• Positive feedback on withdraws, terms of trade, and support services.

Comments

@FreemanZ's picture

I rate the broker according to the age. Brokers which were founded more than 3 years ago are less risky than young.
They have a lot of clients, who applied to withdraw money. If the broker worksб after all the withdrawal request, so it's responsible. It's not a scam. The scam usually disappears when get 10-20 request to withdraw.

@FreemanZ
SanPaulo's picture

License and positive feedback on withdraws is most important for me. When I see that brokers allows to withdraw no less than $300, it takes more than 7 days, and broker offers just one way - I exclude such a broker.

SanPaulo
Salton's picture

Good clues for identifying how reliable the broker is, although sometimes even fitting all these criteria the broker can turn out to be a scam.

Salton