10 Reasons Why You Should Trade with Regulated Brokers
When trading the financial markets, choosing the right broker is one of the most critical things a trader will ever do. While good services are provided by many different brokers, not all are regulated. Trading with a regulated broker offers a higher degree of security, transparency, and accountability. Regulated brokers are held under tight regulations enforced by financial authorities, giving traders peace of mind and a secure trading environment. The financial analyst from 55brokers.com, George picked some of the best forex brokers in his article. The following are the main reasons why you need to trade with a regulated broker.
Security of Funds
One of the most advantageous aspects of trading with a regulated broker is the safety of your money. Regulated brokers are required to keep client money separate from their trading accounts. This means that no matter the financial issues the broker might be facing, the money belonging to the traders is safe and withdrawable.
Fair Trading Practices
Regulated brokers must adhere to fair trading principles and ensure the trader receives clear prices and actual execution of trades. It minimizes the risk of price manipulation, slippage, and other unethical actions by unregulated brokers who can attempt to make profits through the trader.
Investor protection schemes
Most regulatory bodies have investor compensation schemes that protect traders in the event of a default by a regulated broker. The schemes pay traders back their losses within a limit, ensuring that the trader does not lose their investment.
Transparency and Accountability
Regulated brokers must submit frequent financial reports and audits to their respective regulatory authorities. The reports ensure the financial soundness and ethical behavior of the brokers. The accountability assists in providing the traders with increased confidence in the legitimacy and trustworthiness of their broker.
Compliance with industry standards
Regulated brokers are required to comply with high industry standards for trading terms and ethics. The standards involve the imposition of trading limits on the use of leverage, risk statements of disclosure, and conflict-of-interest safeguards and are aimed at providing a level playing field for all traders.
Mechanisms for Dispute
Regulatory authorities give the trader a platform where he can resolve any issues with his broker in the event of a mishap. It is here where the trader can approach the regulatory authority for help if he feels he has not received a fair deal. The regulatory authority can act as a mediator and ensure fair settlement.
Protection against Scams and Fraud
Financial markets are beset with numerous scams with unregulated brokers most likely behind them. Regulated brokers are held under very stringent regulations and are required to undergo intense background screening before a license is approved. This reduces the possibility of falling victim to scams and directs traders’ money into the correct hands.
Enhanced Trading Conditions
Regulated brokers typically have superior trading terms such as tighter spreads, faster execution speeds, and equitable access to markets. As they are monitored by regulatory bodies, they cannot engage in manipulative tactics that create unbalanced trading terms.
Routine Audit and Surveillance
Approved brokers are regularly audited and monitored by regulatory bodies for compliance with the established financial regulations. The audits ensure sound financial markets and prevent the approved brokers from indulging in unethical behavior harmful to traders.
Serenity of Mind
One of the most essential reasons for trading with a regulated broker is the feeling of peace of mind. Knowing your broker operates within stringent regulations, follows good business principles, and provides a secure trading platform is all the assurance you need to just focus on your trading plan without worrying about the safety of your money.
Conclusion
Dealing with a regulated broker is the first step towards a secure and fair trading experience. With protection for the funds and openness to fair trading terms and investor protection schemes, there are a lot of advantages provided by the regulated brokers which are not available with unregulated ones. While unregulated brokers may promise high returns and good bonuses, the risks are too high. Choosing a regulated broker provides a secure, open, and ethical trading environment which ultimately leads to a profitable trading experience.
