The Traits of a Quality Broker

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What is the difference between a trait, a characteristic, and a quality?

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TRAIT:
Definition: A trait is an element of personality that is relatively stable throughout the lifespan and across contexts. In other words, a trait is a consistent element of self that makes that person who he is.

Traits are the general tendencies you’d list if you were asked to describe your child or your best friend.

Traits affect our thoughts, emotions and behaviors.

Psychologists who support the trait theory of personality believe that there are five basic traits (called the “Big Five”): extraversion, openness to experience, conscientiousness, neuroticism and agreeableness.

The best character qualities that will help the investor make money

The financial market is just a surprising structure with great material potential, hence it attracts many investors. That being said, many wonder why some person can profit from the market, while others only lose their capital? Isn’t that not an interesting question? From a statistical perspective, only 5-10% of participants achieve a windfall result on the financial market, and in terms of long-term investments in stocks connected to assets purchased directly, that number drops to 3-5%. Why is it that while there is this great potential, as well as many hi-tech analytical systems and professional analysts at traders’ disposal, that such a small portion of investors can generate results? We decided to take today to consider this question through the prism of an investor’s psychology and character traits. To put it simply, what qualities should an investor possess in order to expect to be able to achieve success on the market?

So, investing and trading on the financial market is a fine and complex matter that requires advanced analytical skills on the part of its participants. That being said, it doesn’t make a difference how bright or educated a trader is, they won’t achieve success if their emotional and psychological state doesn’t meet certain requirements. The problem here lies in the human factor. Few can handle the stress that comes along with working on the market and, as a result, make a series of inexcusable mistakes and lose their capital. This why is we’d advice considering which character traits set successful traders apart from those who lose their funds on the market.

Patience

This is one of the main character traits that successful investors must possess. The reason for this is that it is quite psychologically trying to invest funds in a specific asset, as it is difficult to distance yourself from the already clear benefits of achieving a hypothetically positive result. In addition to this, with all investment activity, there is a defined period that you must wait before receiving profit, which requires a significant amount of patience. Besides that, the market is very dynamic and creates many stressful situations that can disturb anyone’s wellbeing, even the most psychologically resilient.

The stress and fear of losing funds in particular lead traders to make a significant number of mistakes. Many of you have found yourself in such situations, where you have generated a clear forecast and placed the trade, but the market begun to move in the opposite direction, and your position quickly fell into a losing zone! This situation, the vast majority of traders start to panic and make mistakes attempting to mitigate loss by closing out the trading position or increasing/decreasing the total contract. In such cases, the market can play a confusing game with traders. For example, there could be a rate reversal in the direction of the original forecast, resulting in the investor losing even more capital, or even more dynamic rate movement against the forecast, further compounding the investor’s losses. The patience of successful traders stands out. They remain calm in stressful situations and follow the rules outlined in their strategy without adjusting the risk or correcting their forecasted trading position. They simply wait for the result of the contract, regardless of whether that may be positive or negative!

Focus

Successful traders focus entirely on the process of trading, completely ignoring any outside distractions that may come up. Other than that, there is one important nuance. Throughout the trading process, professional traders focus on that technical, emotional or physical factors that they have complete control over, fully blocking out any process that they have no influence on. For example, investors have no influence on market processes, including the ability to swing asset rates at their desired discretion, change the politics of regulators and central banks, and increase the statistical indicators of companies’ assets that they have acquired. However, at the same time, focusing on the regulated processes on which they can influence the end results of investment activity, such as selecting and implementing specific strategies, evaluating how effective a forecast is, diversifying their investment portfolio, correcting for risk and total active capital, and choosing the best conditions for opening a trading position. These factors for influencing trading results, in combination with attentive concentration on efforts and concise calculations, will lead traders to be most effective, as well as producing the best trading results.

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Methodical

Successful traders are different from beginners in how methodically they relate to the technical process of trading. In this case, it is all directed at being effective. Professionals conduct their activity methodically, systematically and strictly adhering to their strategy. Here, there is no room to doubt this or that decision, as financial risk is precisely calculated, the most lucrative investment assets are chosen, vital contract indicators are put into place, and time is managed effectively in terms of investments. Through methodical and precise calculations, these factors, in particular, empower professionals to achieve success.

Diligence

When making any decision, an effective investor always takes into account all the possible ways that events could play out. Despite the fact that the market is very difficult to predict, professional keep several options in handy to help them escape a critical situation need be. Other than that, diligent investors don’t jump into trades the second they receive a highly-accurate signal. They calmly take it in stride and begin to investigate what opportunities such an investment has to offer without rushing or allowing their emotions to dictate their decision. Diligence is one of the most professional character traits an investor can have. This enables them to more already define risks and opportunities to diversify them. As a result, professional investors to assess their activity abstractly so as to come to the most effective trading decisions.

Informed being

Information plays the most vital role in investment activity. It is only possible to identify the most effective assets for investment through information regarding this or that aspect of working on the market. As a simple example. strategies based on fundamental analysis are the most effective approaches to investment activity. Experienced traders use the evaluation of financial data and news regarding the market as a basis for their trading signals. Besides that, the importance of being informed is proven by the fact that, even when working with technical analysis strategies based on patterns and indicators, traders correct their forecasts in accordance with the current information available on the market. Other than that, information gives investors the opportunity to build the most effective investment portfolios. By using extensive amounts of data to construct their portfolios, traders can be sure to find the financial tools with the most promise. Therefore, consistently remaining informed is one of the most important qualities a trader can have, as it critically affects what results your investment activity produce.

Self-discipline

Out of all the qualities an effective trader should have, self-discipline is near the top of the list! Considering that trading is a very emotional process that is affected by a myriad of psychological, as well as technical factors, there are a lot of mistakes that traders can make that are completely separate from the direct trading process itself. The problem is that investment and trading on the financial market are at times seen as a kind of casino, making it, first and foremost, a type of gambling! This fact, in particular, is the enemy of any trader who wants to produce good results. Meaning that self-discipline is an irreplaceable quality of effective investors. Having self-discipline means strictly adhering to your trading plan, strategy, and your continued education and the expansion of your professional skills. Despite the simplicity of this concept, it is very difficult to become self-disciplined. For some this quality comes naturally, but for others, it needs to be developed, however, this is difficult to do from a psychological standpoint alone. By nurturing this quality within themselves, potentially successful investors not only acquire a beneficial character trait, but they also improve their professional standing on the market.

Cope well under stress

As we already mentioned, investment activity and trading are difficult from a psychological perspective. Here you can either lose money or generate huge profits, regardless it has an impact on the emotional and psychological well-being of investors. Misfortunes, as well as success, should temper investors and nothing else. Coping well with stress enables you to survive any difficulties that arise when you are trading, as well as make informed, unemotional decisions. Other than that, coping well with stress is closely related to other qualities such as being disciplined, diligent, methodical, and focused. This is only a short list of the qualities that stress has a significant influence on. Coping well under stress, in particular, enables investors to act under the best conditions psychologically.

Confidence

Without confidence in your trading abilities, you can’t generate results. This is true without a doubt! Here, first and foremost, it is more important to note that investors should always have confidence in their own strategy, even if it isn’t producing positive results at certain times. When you trade on the financial market, many factors have an influence on your results, meaning that any system can become less effective under certain circumstances. However, having confidence in the result protects investors from losing faith in their own work and gives them the strength to continue growing professionally. To increase your confidence trading and improve your discipline professionally, many adopt the simple approach of outlining and planning out their work on the market, noting all the positive and negative trading points. Other than that, confidence, along with analyzing your mistakes, enables you to more accurately develop a trading system, which will definitely impact the final results of your investment activity.

The ability to relax

If you combine all the qualities listed and instill them all in some way into one hypothetical investor, we’d end up with a close-minded and psychologically stunted person that is highly concentrated on a specific process. Don’t you agree that on a personal level it paints a scary picture? Therefore, in order to avoid becoming a robot who sociopathically functions on the financial market completely without emotion, effective investors should be able to relax and switch off from the trading process.

There are many ways to relax, for example, you can take a break from working with financial assets for certain periods, giving you a break from stressful situations and giving you the opportunity to effectively analyze your mistakes and well as your strengths in terms of trading. Another option is to take a break from the monitor. This is also beneficial for activating all the necessary qualities of effective traders. Another approach to relaxing that professional traders often use is to take a break for a few minutes after they get a trading signal, avoiding rushing into placing a trade. If the signal is truly accurate, the market situation won’t change, it will only become more powerful and effective. After this, you can confidently place the trade. Such techniques made quite a bit of profit for traders.

Conclusion

As a conclusion, investment activity and trading hold great potential, as well as create many psychological hurdles, so it is very important for traders to nurture specific skills and personal qualities. In order to reach financial peaks, you need to nurture the qualities of leaders and successful individuals, that is the only way to become a professional.

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Guide: How to Choose a Forex Broker

With hundreds of Forex brokers to choose from, selecting the right one can be both challenging and time consuming. To ease the process, we’ve tested and reviewed dozens of the top Forex brokers and compiled our findings into thorough Forex brokers reviews. But don’t just take our word for it – each Forex broker review also includes feedback from real traders, so that you can make a comfortable, informed decision.

The basic criteria to use in choosing a broker are few and simple. Without doubt, your number one priority should be ensuring the safety of your funds. Firstly, this means making sure that the broker you choose will not steal your deposit. You can best take care of this by making sure that you only use a broker based in and regulated by a financial authority in a respected financial center. Secondly, you need to make sure that even if the broker operates honestly, but goes bankrupt for any reason, that you will be able to recover your deposit. One measure that can be taken here is to only deposit with brokers whose regulators offer deposit protection for clients (such as regulated brokers in the U.K. or Australia, for example). This means that even if your broker goes broke, the government will bail you out by paying back your funds up to a certain amount, although it might take some time. Beyond that, try to choose a broker with a healthy financial situation and a good reputation. Once you have taken these precautions, you can look at what your potential brokers offer in terms of range of available assets to trade, spreads and commissions, overnight financing charges, and speed and reliability of trade execution – and make your choice accordingly.

Use the below links to navigate through the guide:

Things to Consider When Choosing a Broker

Regulation and compliance are – beyond the shadow of a doubt – the most important things to consider when choosing a broker. An unregulated broker can essentially do as it pleases with its traders’ funds. Such a broker might be nothing more than an online scam, so it worth being extremely wary of any unregulated brokers.

Regulatory Compliance

The activity of a trustworthy broker should always be governed by an official regulator designed to protect and promote the integrity of brokerage operations. All types of abusive practices linked to the sale of futures and options should be out of the question, as traders should be protected against fraud as well as manipulation. A US broker must be registered with the US Commodity Futures Trading Commission (CFTC) as a merchant and retail Forex dealer. It also must be a member of the NFA (National Futures Association). These credentials are usually listed in the About Us section of the broker’s website. Equivalents of these trade associations and regulatory bodies are present in nearly every country in the world. Depending on where their broker is based, traders should always research and look for these credentials. In this respect, it’s also worth researching the year when the broker obtained its license as this might carry some significance as well, in regards to the overall reputation and operational history of the broker.

Safety of Funds

Regulated brokers must comply with a set of rules that are meant to safeguard investor assets. This is the primary reason why regulation is so important. Every regulated broker is subject to a “Net Capital Rule” which prescribes a minimum amount of capital to be kept in liquid form. This way investors are protected with a ‘safety net’ in the event that a broker is forced to close. In addition to the requirement of maintaining minimum capital requirements, regulated brokers in most jurisdictions are required to keep all client funds separated in segregated accounts so that client funds won’t accidentally (or purposely) be used for any reasons other than to execute the client’s trades. Some nations, such as the United Kingdom, even offer government-backed deposit insurance for its regulated brokers so that clients can recover part or all of their funds even if the broker manages to misappropriate them.

Select a Forex Broker by the Type of Trading Platform :

Broker Types

The type of broker used can have an impact on one’s overall trading performance and results.

Dealing Desk vs. ECN Brokers

Dealing Desk brokers work similarly to the dealing desks provided by various financial institutions and banks. A Forex broker who uses a dealing desk and is registered as a Retail Foreign Exchange Dealer and Futures Commission Merchant (or equivalent in another country) can offset trades. The No Dealing Desk system on the other hand offsets positions automatically and then transmits them to the interbank market. Brokers working through a Dealing Desk system do not work directly with market liquidity providers, therefore only one liquidity provider remains in the equation, and that gives birth to a fundamental conflict of interest.

An ECN broker on the other hand, offers its traders direct access to the other market participants through an Electronic Communications Network. Why is an ECN broker the superior of a Dealing Desk one spreads-wise? Simple: because it deals with price quotations from several trading entities, it can offer much better bid/ask spreads.

The business model of an ECN broker is an entirely fair one, as it eliminates a major conflict of interest: because it matches trades between various traders, it cannot become the sole market-maker, thus it cannot trade against its own clients. Another advantage of the ECN is that because of the lower spreads it offers, such brokers can charge a fixed commission on every transaction.However, you should not see ECN brokers as a panacea. Under certain conditions, their liquidity can dry up completely, creating much greater slippages than Dealing Desk brokers’ client might be suffering. Another sad reality is that many brokers describe themselves as of the ECN type, but have an element of dealing desk within their operation, so are not “true” ECNs.

Top Rated Forex Brokers

Fees & Commissions

This brings us to the third most important brokerage selection factor: costs

Brokerage fees – Price isn’t everything

Brokerage fees are fees that the broker charges for the services it offers, which are services focused on facilitating transactions between buyers and sellers. The amount of these fees depends on the broker type, and the type of service to which the trader signs up. For the purposes of retail traders, the situation is best summarized by saying the Dealing Desk Brokers charge spreads only, while ECN Brokers charge spreads as well as commissions.

Commissions & Spreads (Fixed or Non-Fixed)

The key difference between fees and commissions that all traders need to understand, is that fees represent a flat charge, while commissions vary depending on the delivered financial product and the size of the transaction.

Premium services offered by the broker?

Full service brokers offer all sorts of additional perks and premium features, some of which are indeed extremely useful. Such services do cost extra though. In this respect, what you should be looking for is a broker who includes as many premium services as possible, as cheaply as possible. In the premium service category, we have features like advice and research covering a wide range of traded assets, retirement advice, tax planning etc. You need to carefully weigh whether you need such services or not. If you’re only looking to execute trades, there’s no point in getting embroiled in any premium-service intricacies. Discount is probably the way to go then.

Does the broker credit or debit daily rollover?

Another factor to consider is daily rollover. The daily rollover is interest credited or debited to the entity holding a Forex position overnight, depending on the relative interest rates of the currencies involved in the trade. Positions which are kept open past 5PM EST are considered positions held overnight. In such cases the broker will consider which national currency the trader bought relative to the other national currency of the pair. If the interest-rate difference favors the bought currency, the trader will have rollover interest credited: in theory, at least. If it’s the other way around, the interest will be debited. The problem is that most brokers make sure their clients pay for holding most positions overnight, and there is nothing to stop them doing this beyond the true market cost.
Most brokers roll over open positions automatically. It is important to know that the rollover interest (whether it’s debited or credited) is calculated on the full amount involved in the trade and not on the margin alone. Another important thing regarding the rollover interest is that it represents a separate revenue stream from the capital gains and as such, it will be taxed separately too, as interest income.

Trading Terms

Time to shed some light on the expressions and terms you may have come across within this guide but that haven’t been fully explained until now.

Select a Forex Broker by Country/Region

Margin

Through a margin account, the investor essentially borrows from the broker, with the intention of controlling larger positions than he’d be able to control based solely on his own invested capital. There are special margin accounts that traders can use for this purpose. The margin percentage is set to 1-2% in the case of accounts which trade in 100,000 currency units. What this means is that in order to control a $100,000 position, a trader needs to deposit $1,000. Margin accounts come with their own risks, and special operating procedures meant to reduce risk for the trader as well as for the broker.

The difference between margin and leverage is simple. Let’s say a broker requires a deposit of $1,000 to make trades worth up to $100,000. The leverage is the factor by which the deposit is multiplied to reach the maximum trade value: in this case, 100, so the leverage is 100 to 1. The margin is simply the amount of deposit required as a percentage of the maximum trade value. Here, it is 1%. It is just the flip side of the earlier calculation.

Leverage = Maximum Trade Value / Deposit

Colloquially, “margin” is often used to refer to the cash deposited with a broker.

Initial Deposit

The initial deposit is the first deposit a trader makes with a broker. This deposit may be subject to special rewards, such as bonuses.

Bonuses & Promotions

Bonuses and promotions are marketing tools used by the broker to “sweeten” its offer, and thus to attract more business. You might want to consider whether a really top-quality broker would feel the need to offer such incentives.

Customer Service

Customer service is very important for new traders and experienced investors alike. Whenever one runs into any sort of trouble with his or her broker, it is the duty of the customer service agent to iron everything out. As such, the expertise, skills and availability of the customer service staff should be a factor within the broker selection balance.

Availability

Funds deposited into trader accounts through third party checks typically take some time to clear. Once they do, they become “available”. Availability hinges on the bank from where the check originates, and the availability schedule of the broker.

Trading Platforms

The trading platform is the gate between the retail trader and the markets. It is also the tool through which the trader performs his trading. A proper, simple, fast and user-friendly trading platform is critical in trading successfully.

Ease of Deposit & Withdrawal

Being able to make deposits and to withdraw money from your broker quickly and easily is highly important. This all depends on the type of withdrawal and deposit options your broker supports. The selection of these payment solutions needs to be as large and as diverse as possible. It is also a good idea to check the withdrawal time, as many traders complain that it can take up to a week to withdraw, when they wanted their funds available quicker.

Minimum Balances

The term “minimum balance” refers to the amount of money the trader needs to keep in his/her account to keep the account open and to receive the services he/she has signed up for. Obviously, the smaller this amount is, the better it is for the trader.

Instruments

In the context of Forex trading, an instrument is defined as a tradable asset, and any asset underlying a derivative. Commodities, stocks, indices and currency pairs are all trading instruments, because through them, value is held and/or transferred.

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