FOREX FOR BEGINNERS: TO BAN OR WARN? Part 2
DOES A BROKER NEED TO LIMIT THE WORK OF A NEWCOMER TO FOREX?
Turning to brokers with the question of whether a company should take responsibility for determining the level of knowledge of a trader and, based on this, limit its capabilities, I received many different answer options. For the most part, companies agree that it is necessary to check with the client at the time of opening an account how much he is aware of the opportunities and risks of trading in the foreign exchange market, however, somehow verify the veracity of this answer, be responsible for his subsequent actions or limit his capabilities within the services provided does not make sense.
“Given that both the client and the company are interested in the fact that the trader still began to trade through the company (and the company is even more interested in this), the objectivity of such a check will always be in doubt. However, even if some specially designated body does it, it will also be difficult to guarantee the quality of knowledge testing, ”Nikolai Solabuto, Managing Director of Finam Management.
This is quite a reasonable opinion: of course, a self-respecting company whose earnings are based on a commission on the client’s trading volume, informing the client about all possible situations, maintains not only its reputation but also its income. A trader who quickly loses a deposit is unlikely to continue trading and will no longer make a profit; therefore, to reduce the percentage of rapidly merging customers is in the interests of a bona fide broker. But forcing a beginner to trade only on demo or cent accounts or checking his knowledge and strictly determining the set of tools available to him seems like a not entirely smart decision. The amount of funds that a trader can and wants to risk is different for everyone, and it depends on the well-being of the person. Everyone prefers to receive knowledge in different ways: someone wants to see a demo, while someone is immediately interested in going into real trading,
“It is difficult to objectively select criteria for assessing the level of financial education of traders because different trading strategies require a different level of knowledge,” said Viktor Kupriyanov, representative of the dealing department of JustForex.
ONCE AGAIN ABOUT FOREX NEWBIE LEVERAGE
The only thing that should be limited (and many companies also agreed on this opinion) is the leverage provided to the newcomer. If, when opening an account, a trader indicates that his level of knowledge is low or absent, then it would be helpful for the company to think a little about the risks for the client, giving a maximum leverage of no more than 1: 100, explaining the reasons, and notify him of the possibility of increasing the advantage over time . If the client assures that his level of knowledge is sufficient for active scalping with significant leverage, then probably he should not be limited in his capabilities, because he consciously takes risks.
“Based on the client’s experience, a decision is made on the level of guarantee coverage that is established for him. The more experienced the client, the larger the size of the “shoulder” is acceptable for him. This is in the interests of the broker since a client who does not adequately assess risks and makes transactions without a proper understanding of the situation is likely to lose money. As a result, it will cease to be a source of commission for the company and even create a bad reputation for it and exchange operations in general, ”Nikolay Solabuto, Managing Director of Finam Management.
Those. Notify of all risks, tell about all possible situations and at the same time give the client the right to choose how he wants to work and what risks he is ready to take, this is a very democratic approach that suits all three parties – the company, the client and the regulator.
Anton Sharonov from NPBFX answered this question very well: “As for newcomers and risks, I like the approach of Swiss Forex banks, the essence of which is to spell out all risks in the contracts explicitly, and also to indicate the limits of liability of the parties to the contract as much as Forex- company as well as customer. In mature civil societies, a capable client is capable of deciding whether this type of activity suits him or not. ” So why don’t we take advantage of this rewarding experience?
TO SUMMARIZE AND MAKE RECOMMENDATIONS
Summing up, I must say that the article turned out more for company representatives than for traders. Perhaps this happened because the market is changing due to the emergence of regulation, and at the same time, the opinions of dealers are taken into account. Still, the idea of traders is not very.
We are put in the position of an unreasonable consumer who is the last in the chain of decisions. At the same time, the quality of industry services is evaluated, alas, only by the abundance of complaints, not taking into account the positive trading experience, which is a lot, but which is not customary to speak openly. Therefore, not accepting the responsibility to speak out for everyone, but, still having considerable experience and having long watched the development of Forex in Russia, I would say that it is entirely pointless for limit trading to novice traders. With this approach, an industry that can generate income for everyone will perish. As Oleg Ohrimets from Exness Group said correctly: “Forex retail was created to simplify access to financial markets for individuals, regardless of their qualifications. Any artificial restrictions will only lead to the transfer of customers to other jurisdictions. ”
But to make a list of recommendations for the broker about what should be reported to the client who opens the account, how to notify him of the risks, and allow him to choose the right tools for himself at this level, it is quite possible. It is unlikely, of course, that this will significantly reduce the share of lost first deposits, but it will increase financial literacy, customer awareness and reduce the flow of claims.
ADVICE FOR BEGINNERS FOREX TRADERS!
For traders, I will recommend choosing companies that care about the education and capabilities of their clients, do not hide anything, and report risks as openly as possible. Pay attention to what your managers tell you what they promise in advertising. Anyone who speaks openly about trading as risky investments and potential losses associated with the trading process is more likely not to deceive your trust. And vice versa…
“When filling out the registration form, we always ask the client about his knowledge, work experience, and warn about trade risks. If he has insufficient experience, then we strongly recommend that you familiarize yourself with the market on a demo account. Also, for beginners, we have a Forex section and a Help Center on our site. By default, we provide experienced clients with leverage of 1: 100, and not a maximum of 1: 500, ” is the modern experience of one of the most popular companies, the name of which I do not want to name so that the article does not seem to be an advertisement. I want to show that this is the right path, open, honest, and worthy, which brokers are already following, creating the proper basis for the work of the modern foreign exchange market in Russia. Fortunately, there are quite a few such companies.