1. Getting Started - 4. Things to Avoid!

While being familiar with the attributes of a reliable brokerage firm can guide you to the best brokers, knowing the red flags that mark an unscrupulous broker can save you hassle and expense.

Hunting or Sniping - prematurely buying or selling near preset points - are bad acts committed by brokers to increase profits. Obviously, no broker admits to committing these acts, but a notion that a broker has practiced hunting or sniping is commonly believed to be true. Unfortunately, the only way to determine which brokers do this and which brokers don't is to talk to fellow traders. There is no blacklist or organization that reports such activity.

Strict Margin Rules - When you are trading with borrowed money, your broker has a say in how much risk you take. As such, your broker can buy or sell at its discretion, which can be a bad thing for you. Let's say you have a margin account, and your position takes a dive before rebounding to all-time highs. Well, even if you have enough cash to cover, some brokers will liquidate your position on a margin call at that low. This action on their part can cost you dearly. Watch your margin calls!

Fraud! - The United States Commodity Futures Trading Commission (CFTC), the federal agency that regulates commodity futures and options markets in the United States, warns consumers to take special care to protect themselves from the various kinds of frauds being perpetrated in today's financial markets, including those involving so-called "foreign currency trading."
- For more informations visit www.cftc.gov

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