Trading with regulated Forex broker has many advantages over the unregulated ones. Regulation is the only thing keeping business in check, assuring the clients that their investment is safe and, above all, legal. This article discusses why one should always search for regulated brokers, why is regulation important, and how starting offshore can help solve regulatory issues.
Importance Of Regulation
There should always be a financial regulatory arthrotomy that will step in when things end up in the gray area of economy and law, and FX brokerage isn’t any different. Moreover, fx brokers offer financial services and participate in one of the most liquid market sectors in the world. Regulation is here to protect the clients and investors.
The regulation also helps build trust between brokers and their clients, since most clients often don’t have the time to go through each investment. Thus they depend on trust, and regulation can help build that trust. Without the regulation it would be too easy to steal clients money: all it would take to become a broker is to create a company and the company’s website.
Advantages of Regulated Brokerage
The regulated broker will always have a valid license number and ID, and will probably be proud of it. This general assumption isn’t false, and most regulated brokers are proud of their regulatory agencies, and the information regarding the regulation they succumb to will often be visible on their webpage.
According to AOL, brokers have to make a recommendation that is suitable for their clients. And when you opt for a regulated broker, you are protecting yourself from legal control.
Regulated brokers don’t manipulate the market prices, and will make your assets more secure. Moreover, brokers will make sure their regulation status remains clean, for even the smallest doubt can cause mistrust among clients.
Starting offshore provides extra security for all US citizens. Many other countries impose stricter regulations upon brokers, making sure the client’s assets are extra secured.
There is always a risk when choosing the broker, but it is less probable that the offshore broker will scam you. Starting offshore will also diversify your market, allowing you to trade in something other than the USD.
Another reason would be a lower margin on trades. The US brokers succumb to the CFTC higher maximum allowable leverage, which is 50:1 (while other countries offer at least 100:1 limit). To translate: starting offshore will grant you greater access to your money. You will also be able to open and run more trades if you have an offshore broker.
Regulated brokerage is necessary not just for the clients but for the market itself. It is a matter of accountability, law, and responsibility. Furthermore, it is a matter of trust.
Legitimate brokers will build their trust, obtain a license and follow the rules of the game, which will pay out on the long-term basis. On the other hand, clients will feel safe if the brokerage is regulated.
Also, consider starting offshore if you want to be extra secure. Apart from safety, an offshore brokerage might offer some additional benefits, such as flexibility and financial stability