Wednesday, October 14, 2020 / 11:00
AM / Sponsored Post / Header Image Credit:
In 2016, the forex trading market saw an average of
$5.1 trillion in trades per day. With that much money going back and forth around
the world, it begs the question - does having a regulated or unregulated broker
matter?
For most forex traders looking to trade and even
make a living legitimately, it does matter.
Although forex brokers are doing the same thing,
providing a platform and a service for forex traders, is there a difference
between a regulated and unregulated broker? We dive further into this question
to show why there is a difference and why using a regulated broker is in your
best interest.
Regulated vs. Unregulated: The
Difference
The main purpose of having a regulatory
body in the forex market is to prevent
fraudulent activity from occurring. Because the market deals with foreign
exchange daily, it's essential for the trader's safety to have regulations
preventing fraud.
The regulatory body also withholds the standards
and regulations put in place across the board. This means any brokers that do
not follow the regulations could get audited, have legal action taken against
them, and even lose the validity of their license as a broker.
An example of an unregulated broker is Hugosways. Although it is in the process of applying for a
license, it still remains unregulated. Because of this, it can often get involved
with more-shady forex trading.
Benefits of Using a Regulated Forex
Broker
Security and Safety
One of the top benefits of using a regulated broker
is the safety and security behind it. As mentioned above, unregulated brokers
pose the risk of getting audited and even having legal action taken against
them. If you have money within an unregulated broker, how much can you
guarantee its safety?
Honesty and Transparency
Working with an honest and transparent company is
an essential perk to have, especially if you're working with quite a bit of
money. As the trader using the brokerage service, you want to know what is
happening with your money and that you can access it at any time.
An example of a regulated broker is FBS (you can
read more from this FBS
trading review). Since they are regulated and having
the proper licensing, you can be more confident that your morning is safe.
Safe From Fraud
Another benefit of regulated brokers is the
protection from fraudulent activity. Typically, regulated brokers do not risk
losing their license, reputation, and position on the market as a trader, which
means the chances of being involved in fraud are minimal.
Regulated brokers won't cause issues within the platform,
change the prices, withhold client funds, or do anything that would work
against their clients. The result for the client is a trusted broker that poses
no cause for concern.
Even with all the benefits of using a regulated
broker, some prefer using unregulated ones. Although they pose a higher risk,
they come with more considerable leverage, leading to a larger payout. However,
with no protection with unregulated brokers, the risk ends up being far greater
than the reward.
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