The Advantages of Trading Forex with a Regulated Broker

The Advantages of Trading Forex with a Regulated Broker

FX trading is the buying and selling of currencies in the global market to profit. It is one of the most exciting forms of online trading, with thousands of traders participating in the market daily. However, with the increasing popularity of forex trading, the number of unregulated brokers has also increased. Unregulated brokers, also known as offshore brokers, are not subject to strict regulations like regulated forex brokers. This can lead to problems for traders, including a lack of transparency, poor customer service, and even fraud. This article discusses the advantages of trading forex with a regulated broker.

What is a regulated broker?

Simply put, a licensed broker is one whose financial operations are tracked and supervised by a local regulatory agency. You might have heard of fancy names such as FCA, CFTC, NFA, and many more. These organizations serve as financial watchdogs and have as their only objective the regulation of the financial markets within their authority, which includes corporations like insurance providers and, of course, regulated forex brokers.

In other words, a broker or any other financial institution that is “regulated” by the appropriate authority receives a license to operate in the territory and abides by the relevant laws and rules, such as subjecting one’s business to routine audits, ensuring transparency, and most importantly, safeguarding investor interests. When a regulated broker disobeys the rules and criteria established by its regulator, the agency may take legal action, revoking the license.

Six benefits of trading fx with a regulated broker


Regulated brokers must disclose important information to their clients, such as their trading conditions and fees. This information is typically available on the broker’s website, allowing traders to make informed decisions about their trading strategies. On the other hand, unregulated brokers may keep this information private, making it harder for traders to understand the costs associated with their trades.

Safety of funds

Regulated brokers are required to segregate client funds from the broker’s funds. This means that client funds are held in separate accounts and are not used for the broker’s operations. If the broker becomes insolvent, client funds are protected and can be returned to the trader. This is not the case with unregulated brokers, who may use client funds for their operations, putting traders’ funds at risk.

Customer service

Regulated brokers are required to provide a high level of customer service. This includes providing support in the trader’s native language and offering educational resources and training materials. However, unregulated brokers may provide different customer service levels, making it difficult for traders to get the help they need.

Legal protection

Regulated brokers are subject to strict regulations designed to protect traders from fraud and other illegal activities. If a trader is a victim of fraud, they can file a complaint with the regulatory body and seek compensation. On the other hand, unregulated brokers may not be subject to the same regulations, making it difficult for traders to seek legal protection.


Regulated brokers have a reputation to uphold, as they are subject to strict regulations. This means that they are more likely to act in customers’ best interests and provide a high level of service. Unregulated brokers, on the other hand, may not have the same reputation level, making it difficult for traders to trust them.

Recourse in case of a dispute

In the event of a dispute between you and your broker, this organization can provide recourse for all parties. If things get out of hand, no need to worry – there’s always someone looking out for investors like you, who need assurance and peace of mind when it comes to their investments! 

Regulation of Forex in the US

The National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) oversee the forex market in the United States. In an attempt to safeguard private investors who participate in the futures markets, the CFTC was founded in 1974. The CFTC’s main objective is to level the playing field for all traders and investors. One method they’ve used is to publish the Commitment of Traders report, often known as the COT report. Every Friday, the COT report is released and includes different trading positions by type, such as commercial hedgers, big speculators, and minor speculators.

The NFA is the second regulatory agency in charge of regulating the actions of forex brokers in the US. Every American foreign exchange trading broker and introducing broker is required to register with the NFA. The NFA, which functions largely as an extension of the CFTC, handles the registration and licensing procedures. Only a few brokers, including Oanda, are licensed by CFTC to do business in the United States.

Bottom line

Trading forex with a regulated broker offers many advantages, including transparency, the safety of funds, customer service, legal protection, and reputation. However, while unregulated brokers may sometimes offer lower fees and more flexible trading conditions, the risks associated with an unregulated broker far outweigh the potential benefits. Therefore, it is important for traders to research the broker they are considering carefully and choose a regulated broker subject to strict controls.

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