A middleman whose job is to execute buys and sells in the market for their clients (traders).They receive a commission/fee for matching buyers and sellers against each other.
A financial regulatory body in the United Kingdom that operates independently from the UK government. They regulate financial firms and make sure there’s no financial scams going on within their country.
An increase to trade with a value far greater than the capital a trader has in their account. If your leverage is 1:50, that means if you have $1000 in your account, you’ll be able to trade as if you had $50,000 in your account ($1000 x $50,000). With greater leverage comes bigger gains AND bigger losses.
BeginnerEarly Stages for Beginners8 Topics
Forex Terminology11 Topics
- Major and Minor Currency Pairs
- Basic Forex Terminology
- Pips & Ticks
- The Broker & The Spread
- What is a Lot?
- Stop Loss & Take Profit
- Margin & Leverage
- Retracement & Reversal
- When Can I Trade Forex? Sessions - Market Open and Close
- 3 Types of Analysis (Technical, Fundamental, Sentiment)
- 3 Ways a Market Can Go (Up, Down, Sideways)
Margin & Leverage2 Topics
IntermediateIdentifying Scams2 Topics
Brokers for Beginners5 Topics
Technical Analysis13 Topics
- Types of Charts
- Understanding Japanese Candlesticks
- Candlestick Patterns For Beginners
- Single, Double & Triple Candlestick Patterns
- Support and Resistance
- Confluences w/ Candlesticks & Support & Resistance
- Counter Trend Trading/ Counter Trend Lines
- Moving Average
- Top-Down Analysis
- Consolidation Trading (Breakout, Retest, Continuation)
AdvancedUsing Indicators6 Topics
Technical Analysis (Part 2)8 Topics
Market Structure5 Topics
Fundamental Analysis9 Topics
CompletionRisk Management for Beginners8 Topics
Psychology for Beginners7 Topics
Personal Psychology Questions2 Topics
Regulated Broker vs. Unregulated Broker
So back to what I was saying about the brokers in the 90’s who would take people’s money and run – we’re going to bring that back to the forefront. Those were typically unregulated brokers in the 90’s who didn’t have anyone to hold them accountable for anything.
Now, every country has a governing body that holds brokers to a certain type of standard. They have a specific amount of money (minimum capital), they have to follow strict rules, they can’t offer whatever type of leverage they want, they can’t manipulate price, and more.
A regulated broker is exactly that – a brokerage firm who will follow all of the rules created by the CFTC (United States), FCA (United Kingdom), IIROC (Canada), and other governing bodies.
Now, not all unregulated brokers are scams. Some just can’t afford paying millions of dollars to be regulated and to remain regulated. They may have just started out, but seriously want to be in the brokerage industry. Even though that may be true, it is still risky to trade with an unregulated broker.
Your money isn’t protected with an unregulated broker. Meaning if for some reason you have $50,000 in your unregulated brokerage account, and the brokerage goes out of business, your money is gone.
If you make $50,000 over a few weeks/months/even years with your brokerage and you wanted to withdraw that money, they don’t HAVE to give you anything. You can make $100,000 in 12 months, and if you wanted to withdraw your money, again, they don’t have to give you your $100,000 – and there’s NOTHING you can do about it.
You can’t sue them. You can’t call the police. Nothing. Because they are an unregulated broker, and you knew that before trading with them.
Having said all of that, unregulated brokers are competing with each other, and most of them will withdraw your money because they want to remain in business. They want to keep you as a client, and they want you to tell all of your friends to use their brokerage firm.
I’m just telling you that that’s the RISK of using an unregulated broker. Unregulated brokers, for the most part, will withdraw your money, but in the case they DON’T for WHATEVER reason, there’s nothing you can do about it.
You can read reviews on specific unregulated brokers, and you will see horror stories or songs of praise. Some unregulated brokers are scams, and some are actually good; but there is a risk regardless.
With a regulated broker, you know your money is protected. No matter if the company goes out of business, or if you make an exuberant amount of money, because they are regulated by the government, you can withdraw your money at ANY POINT IN TIME. No matter what.
If you make that same $100,000 over 12 months with your regulated broker and for some reason, their technology on their website isn’t working when you request a withdrawal and their customer service team isn’t responding, since they are regulated, you can report them.
Knowing all of this, it makes sense to use a regulated broker, right? So why do so many retail traders use an unregulated broker?