If you are interested in making money online, then chances are that you probably know by now that forex, also known as the foreign exchange market, is one of the biggest and most decentralized liquid markets in existence, with daily volumes exceeding $5 trillion. And while its accessibility and financial opportunities might make it look like an easy and fast way to make money, successfully trading on forex can be very challenging. Before scoring your victory and earning money, you have to go through an extensive learning process. One of the most important things you should learn when trading is the difference between regulated and unregulated brokers and which one to choose based on your needs. So if you want to find out more about this subject then keep on reading this article.
Regulated vs. Unregulated Brokers – The Differences
When trading online, you are entrusting another party to use your funds fairly and for the right purpose as promised. However, money is tempting, and if it falls into the hands of the wrong entity, then chances are that you might never see the sum you have invested ever again, let alone any profit. This is why, if you wish to avoid fraud and scams, choosing a regulated broker is the safest option to go with.
There is currently no international organization in place to protect all the forex traders, however, there are various countries closely monitoring and overseeing the forex trading activity, online forex brokers, and their legitimacy. If you are just starting in this field and you want to make money with forex, then make sure to do your research about the regulations of your country and the country where the broker has its headquarters.
Benefits of Regulated Brokers
If you want to make extra money safely and securely with trading, then using a regulated broker is the way to go. Regulated brokers can be held accountable if something is to happen to the money you give them to invest for you. On the opposite side, there is no guarantee that an unregulated broker will not take your money and run away with it, as there is no way to audit and punish them.
Another benefit of working with a regulated broker is transparency and honesty. You want to make sure that you know exactly where your money is at all times, how it is being invested, and how you can access it when needed. Using a regulated broker that is transparent and honest with how your money is used can offer you some peace of mind.
Benefits of Unregulated Brokers
Unregulated brokers would not be so prevalent in the forex market if there were no benefits at all to using their services. But what exactly are these benefits? The most important one is that they bring greater leverage to the table. However, greater leverage also means greater risk. So, be careful about how you choose to trade your funds.
Finally, whether you choose to go with regulated brokers or with forex brokers that accept US clients but are not regulated, you want to make sure to inform yourself about all the possible outcomes available with research and patience.