Regulation is necessary in order to protect traders from unscrupulous Forex brokers who take advantage of their clients. Currency trading is a complex form of investment, and because it is decentralized and mostly done online, regulation plays a vital role in ensuring the welfare of traders.
So why exactly should you trade only with regulated Forex brokers? What do they offer that unregulated Forex brokers do not? And how will all these affect your journey as a Forex trader?
The number one reason why you should choose to trade with a regulated broker is security. When you venture into Forex trading, you will need to submit personal and financial details to the broker, deposit your hard-earned money to fund your live account, and do your trading activities online.
Unless you want your data, money, and transactions compromised, then you should make sure that the Forex broker you’re dealing with is regulated by the proper authorities.
Regulation requires Forex brokers to submit pertinent documents regarding their operations and financial capabilities.
In addition, regulated Forex brokers are subjected to regular reviews, evaluations, and audits.
All these requirements helps to ensure that they engage only in ethical business practices and that they work hard to maintain or even improve upon industry standards. For traders, these equates to a safer trading environment as well as a sense of security concerning your funds.
On the other hand, trading with unregulated Forex brokers almost always guarantees that you will have a hard time withdrawing money from your account if you ever get the opportunity to make some profits, that is.
With such brokers, you can never be sure that the broker is not utilizing fraudulent means of increasing their income at your expense cases of which abounds the financial markets.
In the event that you discover you’re being cheated or that your funds are being used inappropriately, you will have very little (almost no) chance to recover your losses or your money.
Forex trading is complex to say the least, and the last thing you need is a Forex broker whom you can trust. Thus, it is highly recommended that you choose to trade only with a Forex broker who is reputable and credible two of the qualities that you will find only with regulated Forex brokers.