The Forex market never sleeps. It witnesses a huge trading volume of more than $5 billion almost daily. Such a market, if unregulated, will collapse and cause financial ruin of epic proportions. Hence forex regulations are absolutely essential to ensure the financial safety of the traders, investors, brokers, and of the industry as a whole. If you are a forex trader in search of a broker platform then make sure that the broker is subject to local and international financial regulations.
What Is Forex Regulation?
Forex regulation refers to the body of laws and guidelines that govern the forex trading markets, forex broker platforms, and financial institutions of the foreign exchange industry. The regulations are specifically aimed at the protection of forex traders and investors against fraudulence and other financial risks.
Benefits of Working With a Regulated Broker
It is of the utmost importance to conduct forex trading and investment through a regulated forex broker to prevent money laundering and other such financial scams. The reasons why it is imperative to work with a forex broker that is subject to regulations are listed below:
1. Financial Security
The financial laws make it mandatory for the forex broker to maintain a separation of accounts between the funds of the investors and that of the forex broker firm. Moreover, the brokerage firm should not use the client’s funds to repay the creditors. The laws ensure the complete safety of the forex trader’s funds.
2. Transparency of Trading Operations
International financial laws and regulations compel the forex brokers to conduct the forex trading and investment operations in complete transparency without any unethical manipulation. The regulated forex broker has to submit regular financial reports of the trading sessions and investments to the registered user of the brokerage firm thus maintaining absolute transparency.
3. Security Against Frauds and Scams
You may rest assured while trading through a regulated forex broker as a licensed and regulated forex broker never gets involved in money laundering and financial malpractices. A regulated forex broker never takes part in unlawful practices like manipulation of the forex currency prices, opening and closing of the trading positions against the client’s permission, withholding the client’s funds without any reason, and so on. Such practices result in the imposition of heavy penalties upon the broker and also ensure protection against frauds.
4. Provision for Legal Action for the Resolution of Disputes
With a regulated forex broker you almost never face any dispute, but even if you do, there is always a legal recourse for you. If you need to file a suit against a regulated broker then the regulations will make it easier for you to do so. Besides, unlike a fly-by-night forex broker, a regulated broker is always available over phone, email, and live chat for constant support and assistance.
How to Identify a Regulated Broker?
There are two quick and easy ways of identifying regulated & the best forex brokers, as listed below:
The first method is to read the reviews and feedback posts of the forex broker platform at authentic review forums and websites.
Keep an eye on the rating and select the platform that is rated the highest. However, if you feel that the reviews do not seem genuine, then proceed to the next method.
The other method is suited for intermediate or professional traders. It involves the following steps:
- Read the reviews and visit the forex broker platforms that enable trading at your preferences
- Do a background check of the licenses of the brokers and conduct demo trading through them all before settling for the right choice.
Conclusion
Forex trading may be risky but with a regulated UK forex brokers by your side a beginner can venture into the volatile forex market without any fear. Check the validity of the license status of every forex broker and make sure that the platform offers 24×7 customer service. Verify the license number of the forex broker to ascertain its authenticity. Conduct demo trading through the broker platform and do not forget to keep a tab on the investment portfolio to be sure of the safety of your funds.
