Why Think Beyond ‘Balance’?
When it comes to trading Forex one of the main things that people are concerned about is risk. Further, good risk management is often understood as one of the very key qualities of a successful trader. While it is necessary that we always assess the exposure of our positions to external influences, to make use of stop loss and take profit functions, and while it is necessary we set our lot sizes appropriately, comprehensive risk management in forex goes beyond this all the way down to your choice of broker, the software that you use, and the regulatory structure you sign up to. If we think in trading terms, there is no point putting ongoing trust in a positioning framework if fundamental analysis shows this position is immediately stable.
Similarly, in chess, there is no point playing out a winning strategy if the table on which the board stands is going to collapse mid-contest.
A broker could offer you all of the trading advantages in the world but there is no sense in this if your funds are not secure because you are not dealing with a reputable company. Security rests on stability and stability comes from tried-and-tested accountability.
An Established Licensed Broker – Sometimes Uneventful, Always Essential
Our understanding of the needs for rock solid stability is why, for WorldQuest, already a well-established company, our acquisition of a top-level Market Maker license from the ASIC is significant. The Australian Services and Investment Commission (ASIC) oversees corporations, markets and financial services of Australian companies. They are considered to be among the gold standard of bodies fulfilling such a role internationally. Alongside the CFTC in America, and FCA of the UK, ASIC is renowned internationally for its standard of professionalism and its ability to enforce laws and protect Australian customers, investors and creditors. WorldQuest also has systems and provisions of its own in place to safeguard and underwrite client funds, and maintains around-the-clock customer service to ensure the peace of mind of our partners and traders.
There are brokers available who will offer trading with weak licenses, or even no license at all. It is important to acknowledge the risks that traders are running when they deal with organizations that have such a setup.
In order to secure and maintain a top license such as one issued by ASIC or the FCA, a brokerage firm must spend time, money and attention in coordination with a governing body – one that itself is in place to ensure protective legislation is adhered to. There is constant upkeep, monitoring of transactions, compliance checks, and frequent training and record keeping involved in this. This needs to be evidenced to the governing body so that an organization can continue to hold any esteemed license. Further, in a well licensed company many individuals assume responsibility for the conduct of their firm in relation to international standards of compliance. These standards at their core are uniform across respectable jurisdictions.
In this sense then, trading with broker with sub-par evidence of these things not only compromises your ability to access redress in the event of an issue, or the security of your balance. It also risks entrustment of funds to a business that is not mature enough to treat its clients’ stability as the foremost concern of its priorities, or one that cannot keep to the commonly accepted standards of the industry.
The Big Picture
Stature in forex affords brokers trust and the ability to hold more secure payment gateways and better liquidity, endowing the company with greater stability still. Secure companies will not, in practice, have funds that are misplaced or misappropriated at any part of the trading network. There are many ways therefore that a decent corporate profile and accountability reduce the risk that this could impact upon a trader’s activity and portfolio.
Holistic risk management in trading should take all risk into account. One cannot simply look at the spreads and written guarantees of a company and take these at face value. Similarly, one cannot even manage their risk properly by looking at charts and developing a balance without considering what it is constructed from.