There are many reasons why a regulated forex broker is preferable to a retail broker. In short, regulated forex brokers act as intermediaries between buyers and sellers. As we have seen, there is a great deal of money at stake, even in the small world of forex trading. Therefore, there is a lot at risk.
With that said, let’s look at the advantages that come with regulated forex brokers versus amateur or semi-professional traders. First off, it is much easier to regulate your trades. In the past, many brokers took a hands-off approach to online trading. However, there was simply no way for the average investor to regulate his/her trade; after all, how do you expect an expert trader not to use the leverage necessary to win?
The fact that regulated south african forex brokers have to follow government mandates also means that they can offer better service to their clients. You see, all transactions and activities performed on the trading floor of the exchange must be above board. This means that the broker has to make sure that margin requirements and other rules of the exchange are followed.
This alone reduces the chances of a retail trader being able to manipulate the market. It also means that if a professional trader happens to be on the wrong side of the law…as many of us can be, he/she will be quickly (and legally) terminated from employment.
The regulation also decreases the risk of fraud amongst traders. One of the primary ways that investors try to game the system is by manipulating the price of one currency against another. In this case, an inexperienced, unregulated offshore forex broker could easily “lure” inexperienced, undisciplined, and less trustworthy traders into his company’s trading room.
When these traders become disenchanted with the lack of education, due diligence in the trading platform, they will often start to withdraw from the market. This inevitably leads to an acceleration of the downward trend for the weaker currency.
As stated earlier, the Regulation does not mean that every regulated forex broker has to become a regulation agency. Many brokers choose to be unregulated brokers. They are allowed, however, to follow the minimum regulatory requirements, offer regulated services and perform regulated functions.
These brokers must still adhere to applicable anti-fraudulent and anti-spam laws and regulations but are not held to be regulated by the SEC or Commodity Futures Trading Commission (CFTC).
If you are planning to engage in the Forex market, you should become familiar with the difference between the regulated forex broker and the unregulated broker.
If you are considering is not regulated, it would be wise to move on to another broker. On the other hand, if the broker you are considering is regulated, it is a good idea to consider them as regulated brokers. You want to get the most value out of your investment.
Forex brokers can also be referred to as commercial forex brokers or online forex brokers. Online forex brokers do not deal directly with clients but instead have brokers that they work through.
Forex transactions are generally conducted on a trading floor where buyers and sellers meet to place bids and offers on a particular trade. The bid and ask are processed through an online trading platform.
Once a trader has decided to buy or sell, the broker then transfers the trade details to the actual trader. The trade is finalized at the end of the business day when both the buyer and seller have received what they were seeking in return for the sale/buy transaction.
Forex brokers are required to have specific licenses issued by their respective regulatory agencies. These licenses are also necessary to conduct any kind of forex trading. Forex brokers are expected to know about the news events that influence currency rates.
They must be aware of how the news events affect currency rates on the market floor. News events can include changes in government policies and economic reports. Brokers must be able to analyze these news events to make informed decisions regarding trades.
For any forex trading transaction to be successful, the interbank market must be functioning efficiently. Brokerage firms are usually large banks or other large trading institutions. Forex brokers provide trade execution services on behalf of their clients and facilitate trade in the interbank market. There are two types of forex trading: spot forex trading and forward contract forex trading.
With a spot forex broker, you can enter a trade using just one simple trade entry page. You won’t need to give any more information regarding your trade until the trade is finalized. When you trade with a forward contract broker, you enter your order, specify a limit on the trade and then wait for information from the broker to determine whether to execute the trade or not.
While forex brokers can offer a wide range of services to their clients, there are certain factors which they should never compromise on. The most important factor is the security of trade. The brokers must have an efficient and effective security system in place. This ensures that clients’ private information is kept confidential and safe from misuse.
Most importantly, the brokers must also have a good understanding of the different currencies being traded. They must therefore be able to forecast the movements of the different currency pairs in real-time and act accordingly when it comes to pricing the currencies.If you are looking for Forex signals then you can find Best Forex Signals UK here