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  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Personal Psychology Questions
    2 Topics
  5. Psychology for Beginners
    7 Topics
  6. Intermediate
    Identifying Scams
    2 Topics
  7. Brokers for Beginners
    5 Topics
  8. Technical Analysis
    13 Topics
  9. Market Structure
    5 Topics
  10. Completion
    Risk Management for Beginners
    8 Topics
  11. Fundamental Analysis
    9 Topics
  12. Advanced
    Using Indicators
    6 Topics
  13. Technical Analysis (Part 2)
    8 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?