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» » How Forex Regulation Protects Unsuspecting Forex Traders From Illegal Brokers

The Forex Trading market is considered the most liquid market all over the world with more than $5.3 billion being traded every single day. This is such good news for those people who are trying to profit out of the currency fluctuations. Amidst all these profits in mind, have you ever thought of the security of the brokerage options you are in, or the ones whom you are about to hire? Are they capable of securing your money? Or are you merely placing your capital at risk?

Every day, thousands of FX brokers sprout every single day. Despite this huge number, they are never going to be out of options. Sooner or later, you will find the broker that will perfectly meet your needs and suit your lifestyle. But the battle as to who’s the best brokerage can be so tough.

If you have seen adverts about FX trading saying that you will become filthy rich in no time, then you most likely got the wrong idea about it. Unfortunately, only about 5-10% of traders succeed in FX and the rest were just incapable of dominating the market. But if you hire a regulated FX broker, your chances of attaining your dreams to become successful in trading will become high.

But there are a lot of unregulated FX brokers nowadays and they are not trustworthy. In fact, only 5% of the overall number of FX brokers are regulated by their country’s regulatory body. This means that the other percentage never gets subjected to monitoring and might not be following the right regulations. In this case, if you joined these brokers, your capital is in trouble.

What are the risks of unregulated FX brokers?

The biggest risk that you can encounter if you use those unregulated FX brokers is that chance to get into illegal activities. If you become a victim of these brokers, you will never be going to get your funds back no matter where you ask for help. Several countries even step up the security of investors to protect them against unscrupulous activities.

Just like in the US, following the series of fraudulent claims from 2001 to 2008, the CFTC created a task force that will deal with unregulated and illegal brokers. This move is to shield those retail traders from all forms of questionable practices.

Other countries around the world also took several measures to protect their traders and investors against these illegal brokers. A certain requirement has to be met by brokers to be able to get regulatory permits. The requirement needed to acquire their permits varies from one country to another.

Forex broker regulation is critical so it can serve its purpose right. One of the reasons why FX regulation is vital is the fact that it guarantees the right and moral values among brokers. Those brokers who get regulated need to comply with several rules and standards so they can keep up with the regulatory body. If they choose not to follow, they get subjected to fines and penalties or worst, closure of their business.

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