Investing online is a matter of choice and of convenience.

Newbies who had always wanted to test their hands at handling their own investments are often the ones who are easily attracted to online investing (individuals who have suddenly acquired some excess capital from a booming start-up business undertaking, or a blooming professional career). These people find online investing to be a “perfect fit” for their “dreamed fantasy”. Well, why not? Not only does online investing allow them to manage their own investments in the comforts and confidentiality of their own abodes, it is also quick and easy (so it seems) to learn! With their first click on the mouse, newbies immediately experience an exhilarating transformation into their fancied and fantasized role of real stock/forex traders in that very instant; executing orders at will while experiencing the thrill of pitting their own raw trading skills against seasoned money/stock traders online. With hundreds of sites offering free tutorial services, seminars, and e-books, plus a free live demo account to boot, online forex/stock trading is really catching fire with this lot! But, alas, these “George Soros Wannabes” should not fool themselves into believing that online investing (especially forex with its sometimes wild and wide price fluctuations) will be like “pink and roses” all the time.

Investing on line should be treated no differently from traditional approaches to making investment considerations. An extensive, pre-placement Due Diligence work on the chosen online broker must first be done and should be a major factor to consider before deciding to take the plunge! Knowledge of the intricacies of the stock and foreign exchange markets is also vital and must be had before any actual placement is made. And most important of all, these “wannabes” need to do some honest soul searching first to find out if they have the patience and the guts and the temerity to deal with fast moving markets.

Are you prepared to give a sizeable part of your hard earned savings to a stranger whom you just met on the streets? Surely, your answer here is no!

Well, investing through an online broker is, in all respects similar to giving away your money to a total stranger. When you open an account with an internet-based money broker or a stock broker, you will actually be dealing with a faceless entity which can simply vanish sometime after you put in your money with them. In choosing online brokers, all matters of consideration and the few choices you will be making will often be based solely on information provided by their web sites. Usually, choices made here by start-up traders are based on their initial impressions of the website itself. Newbies are often attracted easily to beautifully designed, easy to navigate sites. Others are attracted by perky add-on services such as real time news feeds, free training, readily available expert advice, managed account services, user friendly trading platforms and the like. But hell, all these are also offered and provided free by fake online brokers and scammers! In fact, some of their sites are more professionally designed than those of the legitimate brokers making it harder for us to discern who is who in the industry.

Brokers by definition are intermediaries. This means that they are (without reservation or exception) affiliated with, or officially represent certain market players. The market players in turn are those who are actually involved with the buying and selling of stocks in an exchange and are registered members thereof (in case of the stock market); and, (in case of foreign currency trading) the electronically-linked network consisting of large banking institutions (who are the traditional money traders), multi-national corporations and giant insurance companies (who need to move money globally), central banks (who need to defend the purchasing power of their own currencies and finance international trades), and large investment houses (who handles the investment portfolios of large clients).

For this discussion, brokers referred to here are the retail brokers. These are the brokers who act as agents of and execute orders through the market players they are affiliated with. Retail brokers are mere brokers (intermediaries) and not market players simply because they neither have the sufficient volume nor the required capital to directly trade in the stock markets or in the spot currency markets. We can therefore easily identify the legitimate retail brokers through their official affiliation with established market players. Further, we can easily tag as ’suspects’ the internet based retail brokers who do not publish or declare their verifiable affiliations with established principals. These retail brokers therefore, must be subjected to more rigid background investigations, and submitted to a more extensive due diligence work.