Finding a broker to perform your forex trades on is easier said than done when you have so many different options. Things can only get more complicated if you live in the EU. European traders who want to feel 100% safe will look for regulated traders and make sure their brokers have the right leverage caps.
One of the best ways to make EU forex trading easier is by using the broker catalog to find a good match. But how will browsing through the options in this catalog help find the best brokerage company to trade with? Let’s find out.
1. Finding Brokers with the Right License
The broker catalog will display a list of forex brokers that accept people who live in European countries. These will be regulated in the EU/EEA in order to give peace of mind to any trader looking to maintain their safety.
In the EU, the Markets in Financial Instruments Directive (MiFID II) is responsible for regulating forex trading. This offers a significant amount of protection for all clients. Under this requirement, MiFID II requires all brokers to meet strict safety and quality guidelines. This means they must have proper capital reserves, apply various methods of preventing market abuse, and be transparent with the details offered to clients.
But not all brokers in the catalog will operate strictly in the EU. Some operate in offshore areas yet still maintain their safety. New Zealand or South African brokerages, for instance, come from less strict regulatory environments while still offering the security that EU forex traders are looking for.
Compare the options in the broker catalog to find brokerages regulated by EU authorities, or check offshore options if you want to enjoy a less strict environment.
2. Pay Attention to the Leverage Cap
In the EU, traders must find brokers that use the right leverage. The limit for retail traders is 1:30 for major currency pairs. Meanwhile, for minor currencies and other assets, it’s 1:20.
It can be challenging to find brokers with such low limits. However, with the broker catalog, you can compare the different options and see which one meets the EU standards for leverage while still offering other services that you’re interested in for trading. Some brokerages even operate offshore, which allows them to offer higher leverage, as well as stop-out levels lower than or equal to 50%.
3. Check for Negative Balance Protection
With the broker catalog, you can see exactly which brokers have negative balance protection and which ones don’t. Negative balance protection is mandatory under EU regulations. This is because it limits the loss of a retail client to the amount in their account. This way, traders won’t lose more than they deposit, which keeps them safer.
The catalog makes it easier to locate such brokerages and steer clear of unsafe options.
Final Thoughts
The broker catalog makes EU forex trading easier by letting traders find safer and more transparent brokerages. Traders will easily discover brokers that are licensed and regulated by the right authorities and meet the leverage requirements. If you’re looking for a new broker, don’t hesitate to use it.
