Any investment or binary options trading opportunity carries a certain measure of risk. Prior to investing personal capital, it’s necessary to research proper brokerage firms and sales representatives while creating an actionable trading plan. Asking the right questions and looking for specific warning signs will enable you to properly make investment decisions, monitor your trades and troubleshoot investment issues head-on.
When selecting a broker, there are some questions you should address from the start. Write down all the answers you receive as they can serve as a reference point for the future, particularly if disputes of any sort arise. Don’t focus on one broker, but speak with multiple brokerage firms and be sure to ask each party about their professional history, level of experience and educational background. Prior to finalizing your decision, contact a securities regulator in your jurisdiction to enquire about any disputes or claims filed against the brokerage firm. It’s also important to ask about their regulation status, licenses, fee structures and withdrawal procedures. Keep a record of all your communications, copies of forms and any information you receive from your account manager.
Once you have selected a broker you’d like to work with, there will generally be an agreement or contract to sign. Read over the terms and conditions thoroughly as the information contained with the document covers your legal rights. The firm you work with will more than likely ask questions regarding your financial objectives and financial status that covers your personal income, net worth and investment experience. Be truthful as the broker will use any information you supply to provide tailored investment recommendations. Financial objectives tie in directly with risk management and include terms such as “income,” “growth,” or “aggressive growth.” Be aware of the differences between each phrase and determine the maximum amount of risk you’re willing to incur as it relates to your investment goals.
If you don’t understand any facet of your business dealings, particularly with the investment product itself, ask questions and reference information resources such as business publications and finance journals. Be cautious of firms that encourage you to make investments through a telephone pitch, especially when it’s based on insider or privileged information. Never feel pressured to make a decision on the spot. Often times, catchy marketing language such as “you can double your initial investment within 3 months” may be used. Such guarantees are quite risky and are usually too good to be true, especially if you’re a novice trader. You should never feel obliged to trade in a way that contradicts your financial objectives and predetermined risk measures.
When it comes to transactions, never write checks directly to a sales representative personally and do not send checks to an address that is different from the registered company address. All transaction receipts and statements should be delivered to you and not your sales representative. Such documents serve as official records of an agreement with the date, amount and price of a given security purchase.
While trading of any kind has inherent disadvantages, you can curtail less opportune decisions by preparing yourself with the necessary tools and questions as outlined above.
