5 Reasons You Should Trade With a Regulated Broker

What would be the first step if you like to start trading in the forex market, which has a daily transaction of more than $5 trillion worldwide? First, you have to identify a regulated forex broker and ensure that you start your journey in the industry with a professional and reputed broker who has vast experience in the field. You have to make sure that your investment is safe, and for the same purpose, you need to approach trusted and experienced brokers. There are several ways to finalize a good forex broker for securely handling your money. This article analyses why you must pick a regulated forex broker for trading in exchanges. We also give you five reasons why you should only trade with a regulated broker.

Choosing A Regulated Broker

As a first step, you must choose your broker wisely because your money will be in an online account, and the brokerage firm will trade in the market on your behalf. When handing over cash to a third party, you have to ensure that you can trust the broker completely. It would be best to consider several other factors such as leverage options, past performance, commission rates, spreads, reputation, ranking, expert rating, etc. However, the most critical aspect is to understand whether the broker you choose is a regulated one or not. Each country has a regulatory body to regulate and monitor the activities of forex brokers. For example, if you are on the lookout for a forex broker in the United States, check whether that broker has a membership with the National Futures Association (NFA), a regulatory body for the futures industry.

Similarly, if you are looking for a broker in the UK, make sure that the broker is a member of the Financial Conduct Authority. Swiss Financial Supervisory Authority (FINMA), Japan FSA, ASIC, SFC, NZ FMA, MAS, and BaFin are some of the reputed regulatory bodies in the world. The regulatory bodies will ensure that their members are not involved in malpractices that would harm the prospects of investors. The organizations will also ensure that the brokerage companies conduct their activities within the stipulated guidelines, policies, etc. The regulatory bodies can take action against erring brokers, including canceling licenses. The brokerages will also have to provide financial reports regularly to the regulatory body.

Security For Investments

One of the prime objectives of our investment is to ensure steady returns in timely intervals. Therefore, we must ensure that the principal amount is secure when we invest. Similarly, when you enter the forex market as an investor, it is essential to ensure that your money is safe. The best way to ensure safety is to approach a regulated broker in the field. As per the norms by regulatory bodies, the regulated forex brokers cannot use investors’ funds for other purposes. The brokers will have to keep a separate account for their clients and cannot mix it with the funds of brokerages.

Lack of Malpractices

Suppose the regulated broker is involved in illegal practices, including manipulating prices, withholding clients’ money, etc. In that case, the broker could likely get a ban or penalties for such activities. In addition, as per the norms of regulatory bodies, a regulated broker will have to ensure customer support services, telephone numbers, email, and a direct person to assist with customers’ queries. So, in case you find some problems with your trading, you can use any of the methods mentioned above to rectify your issues.

Risk Warnings

If the brokerage has to file for bankruptcy, it won’t use clients’ funds to repay its creditors while the funds can compensate its clients. In addition, such an option provides increased security for your money irrespective of the financial health of the brokerage company because a broker can invest your money only for client-approved trade.

Regulatory Control

If you are a beginner in trading, you need guidance and support from an experienced player in the industry. Regulated forex brokers have a reputation and vast experience in the field, and you can use their expertise wisely for getting good returns from safe investments. Experienced brokers will never encourage new investors to put their money in risky propositions. Instead, they guide you to invest your money safely and steadily so that you can gradually learn the market. Similarly, it’s also essential to seek the opinion of financial experts regarding the reputation of brokers in the field before finalizing one. All good forex-related websites and financial magazines also provide information and ranking on reliable forex brokers, and you can read such articles to get more insights into the industry.