The internet is currently littered by all sorts of forex brokers – the ones giving you incredible welcome bonuses to those promising lucrative profits from trading with their platforms.

Even though the forex market is slowly becoming regulated, there are some brokerage firms who are simply out to drain the investments of their clients, and they should not be allowed to operate.

When searching for a broker, it’s essential you know which ones are dependable and trustworthy.

You should avoid unscrupulous brokers who, for lack of better words, ‘simply don’t know what they are doing’.

So, you need to do your homework to wean out the strong brokers from the weak ones and the reliable ones from those with questionable dealings.

Trading is not an easy business, so you need not allow your broker to increase your woes.

If your broker gives you peace of mind, you’ll be focused and sober to look for those trade opportunities instead of spending quality trading time trying to sort out some differences with it.

Here are some key questions you should ask yourself and judge if your preferred forex broker is a scam or not:

• Is it regulated?

A broker with fraudulent practices will try to circumvent the watchful eye of regulating authorities. Therefore, you should keep a safe distance with such kind of brokers. Period.

Currently, there are several financial regulating agencies that aim to rid the internet of unauthorized practices. Some of these include the U.S. Commodity Futures Trading Commission (CFTC) and the Australian Securities and Investment Commission (ASIC).

If you find a broker that does not want to go through the meticulous certification process provided by these regulating bodies, then place it behind your back.

• How does it treat customers?

Since the trading of currencies through the internet does not require you to walk physically into your broker’s office to place orders, it is essential that you select a broker who is friendly, supportive and understanding.

Some brokers usually treat their clients like angels when they hear they want to open a trading account with them but dump them soon after they have deposited cash into their live trading accounts.

Search the reputation of the broker on online forums, social media and ask other people who have used it before if it is friendly and cooperative in addressing clients’ issues.

• How does the broker offer its spreads?

Unscrupulous and scam brokers usually hide behind spreads to swindle cash from their unsuspecting clients.

Ensure that the best forex broker you go for offer competitive spreads, which are not too high or too low. Some brokers offer low fluctuating spreads but increase it the moment you start trading.

On the other hand, some offer high spreads which are unmerited compared to those offered by other brokers in the industry.

• What’s the rate of execution of orders?

A good forex broker will provide instantaneous execution of orders. If the dealings of a broker are not transparent, you will be experiencing slippage on your orders and this could compromise your profits.

Therefore, a broker that has not invested in state-of-the-art technology in order execution is not worth your time and, above all, hard-earned resources.

• Will your funds be protected?

Reputable brokers usually have a top-tier team of IT professionals who work round the clock to ensure that the funds of their clients are kept secure and safe.

If a broker is not clear on how your funds are going to be protected from theft, then you are better off not using it for trading.