The importance of trading with a regulated forex broker
When dealing with any financial product or service, it's important to understand the background of the provider. In the forex trading market where many of the transactions take place online, many opportunities arise for rogue operators to start their own forex brokerage service.
These operations typically try and lure customers by offering sign up bonuses that far exceed the industry average and unfortunately many uneducated traders fall into their grasp and lose money.
There are several due dilligence tasks that every trader can action to help them weed out the rogue brokers and find a legitimate forex broker. One of the easiest things to look for in a forex broker is a license or regulation by an industry or government body that administers financial products in their country.
Typically under a regulatory body, forex brokers are forced to adhere to a specific set of requirements prior to being granted a license to operate as a forex broker. Note that not every country regulates forex trading at this time, so it is quite normal to find forex brokers that are not regulated yet appear to be legitimate. Although we can not say that these unregulated forex brokers are doing anything illegal, what we do know for sure is that should anything go wrong, there is no higher power to seek assistance from in resolving any trouble. In short, unregulated brokers don't have any rules imposed on them so they can probably do whatever they want.
At this website, we have made a comfortable decision to only list forex brokers who are regulated. The primary purpose of this decision is to protect the visitors to our website from trouble with unregulated brokers.
We spent quite some time in reviewing unregulated brokers and we can see several common occurences between them:
- Poorly designed website - looks like a template
- Minimal contact information, often just an e-mail and phone number
- Outdated content throughout the website
- No presence in emerging trends such as social media
- Offers and bonuses that exceed industry averages
It can be clearly seen that unregulated brokers offer a lesser quality user experience than regulated forex brokers. So even putting the regulation issue aside, we still wouldn't be comfortable listing them on our website due to the points listed above.
Of course, we do not claim that regulated brokers are perfect - this is why we allow reviews to be posted for every broker listed on our website. At the very least, a regulated broker has somebody to answer to in the event of a dispute and the customer has a better chance of having problems resolved.