Regulated Forex Broker

There are many things one has to consider when he’s picking a Forex broker, like the amount of leverage which is offered, the currency spread or the trading platform that he’s using. Since you have to consider quite a few things when you’re deciding whether he can do a good job with your trading strategy, picking one is hard enough. One thing that should always be on your mind though and it should be the first thing you look at, is whether the broker is regulated or not.

The regulated Forex broker will be a member of a financial authority which regulated their activity. With these brokers, you know that someone monitors the activity of the company and that they respect certain rules and regulations during their trades. Those rules insure that your money is safer and someone doesn’t just run away with it.

Some of the things that regulated brokers have to adhere to are requirements like keeping plenty of financial assets available, to make sure the company continues to function. Another is to follow certain operational procedures and standards, which are defined by the regulating authority.

The regulations will usually ask of them to be transparent with the financial documentation. These companies have to give financial reports which are very detailed. If they don’t respect the rules to which they agreed to, they can have their brokerage membership terminated or they can receive fines. Penalties insure that the regulated brokers respect the rules or at least that during inspections any bad behavior will be discovered.

Since regulated brokers are required to respect certain guidelines, the level of service which is offered is improved and the clients benefit from this. If they make mistakes they answer for what they do and that’s another reason for them to be careful how they behave.

One important thing which they need to respect is the fact that the funds of the company and the funds deposited by clients should be separate. This gives you an additional layer of security, insuring a company doesn’t spend your money to pay wages or any other expense. Another reason why this is a good thing is because if the company becomes bankrupt, the money of the clients is still safe and it can be returned to them. Creditors will have no claim on the money of the clients and that’s yet another reason why a regulated broker is safer to use.

These brokers are also required to respect regulations about things like the clients personal information, the minimum amount of quality offered, the availability of the customer service and the fraud monitoring.

Checking if a certain broker is regulated or not is quite easy, since their site will contain this type of information. Each country has his own regulation body, since this is a worldwide marketplace. The United States, United Kingdom, Japan, Switzerland, European Union or Australia are just a few examples of countries which have their own regulating bodies, with their own rules and way of doing business.

If you’re interested in brokers from the United States, you should look at regulated brokers which are affiliated with CFTC or NFA. United Kingdom brokers should be affiliated with FSA and brokers from the European Union should be associated with either CySEC or MiFID. The standards offered by these organizations will vary, so before picking a broker it’s important that you check the site of the organization that they belong to and you see how you’re protected against mistakes or scams.

While there is no need for a broker to be a member of multiple organizations, you want him to respect the rules of at least one of them. This is the best way to keep your investments protected on the Forex market.

Picking a broker should not be a process that is hurried, so take your time and get all the facts before making the decision. Whether the broker is regulated or not should probably be your first piece of information, but after that you should look at many other things, like his online reviews, his past record, his experience, how much money he made, how many wins and losses he has, as well as the type of Forex trading that he does. You want the broker to have the same style as yourself.