Rules and regulations are a necessity when your hard earned money is involved, especially when there is inherent risk of losing it. If you were to look at a list of the top 100 forex brokers they would all have one thing in common; a regulatory body. These bodies are there to offer security, insurance, and rules that every broker must follow.
That is why it is essential to be one hundred percent certain that the forex broker you choose is licensed and regulated. While not every unlicensed broker is going to be out to con or scam you, there is most certainly extra risk involved. It is best to choose a licensed provider that you can trust.
Why Do They Need a License?
A broker needs a license so they can operate within certain countries and jurisdictions. This gives them access to larger markets and more options when it comes to currency pair trading. Every country is going to have various rules and regulations, as well as access, and your broker will be licensed in one or more.
As well, having a license with some of the major regulatory bodies is going to give a broker prestige and status in the industry. It will also offer them, and you, protection should anything happen that is illegal or unappropriate. A license is something that most brokers strive for, but they can be very expensive.
With the internet being at your fingertips, the fastest way to check on the credibility of a forex broker is to search online reviews. Within seconds you can potentially have thousands of reviews available that can give you great insight on the broker in question. Whether you are looking for an MT4 forex brokers, MT5 forex broker, or any other, the internet is going to be a good place to start.
Check with the Regulatory Body
If you are still uncertain of the legitimacy of forex brokers you are considering, you can most likely contact the regulatory body in question or check the list of US forex brokers. These places will normally have a way of looking up brokers that are registered with them. The ability to do this is going to vary depending on the country, but most will have some way to help you in your search.
Ask For Confirmation
If all else fails it is pretty simple to contact a forex broker and ask for its licensing information. There is really no reason for a broker to withhold this information, as this should be a valued commodity for them. If you have issues getting the license from a broker, this should raise some red flags.
Always Play it Safe
The purpose of investing, even in the fast-paced forex markets, is to make money for the future. With this in mind, it is always a good idea to err on the side of caution when trusting a broker with your money. You must do whatever you can to ensure that the broker you choose is regulated, as there are too many scams on the market today.
If you ever come across a broker that seems too good to be true, or are having trouble confirming their legitimacy, remember that there are many other options available. Look to a broker with a strong reputation, and one that is going to offer you the most for your personal situation.