In fact, feature-wise unregulated brokers will usually offer more, and may generally look much better than regulated brokers. However, it’s very important to keep a realistic perspective and not get sucked in by these tricks because most of them are designed just to steal your money.
In this regard, when choosing your Forex broker the common-sense advice “if it seems too good to be true then it probably is” will be of great help.
How is the Forex market regulated?
Being the largest financial market in the world with its decentralized nature, the Forex market is generally harder to regulate compared to other centralized markets like stock exchanges for example.
However, the difference is that they can only regulate the Forex market domestically in their jurisdiction and this is what makes it easier for big market players in Forex to get away with some questionable and unethical practices.
It’s also noteworthy for retail traders to be aware of price manipulation by big banks which was quite frequent in the past few years and even several big banks were fined big sums by the regulators for their involvement in price manipulation.
Generally, all developed countries in the world will have a financial regulatory agency that is responsible for overseeing financial instructions in the country. However, not all financial regulation is equal and traders are advised to stick with brokers regulated in developed countries like the US, the UK, EU countries and Australia.
Here are some of the regulatory bodies in the developed countries:
What regulation of forex brokers means for traders
The last thing that any trader needs to do is spend time on arguing with the broker about what happened and why it happened, or being unable to withdraw funds for some ridiculous reason.
Unregulated brokers should be immediately disregarded for the simple fact that you never know when they may just close the company and run away with the money. They have no obligation to let you withdraw your funds since they are not regulated and there is nothing you can do about it.
Finally, although there are some bad regulated brokers, that occasion is more the exception than the rule. The benefits of trading with a regulated broker are unquestionable and that is absolutely the first condition to look for when choosing a Forex broker.
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