FINANCIAL SPOTLIGHT: The Importance of Regulation in Forex Trading

By  //  November 29, 2018

Share on Facebook Share on Twitter Share on LinkedIn Share on Delicious Digg This Stumble This
Nowadays, people are investing in trading to gain financial independence. It is a dream of everybody to trade and control income from anywhere in the world. One of the facts about forex trading is that it has now become the largest financial market all over the world. It’s also decentralized in nature, what made it difficult to regulate in the in past years.

Nowadays, people are investing in trading to gain financial independence. It is a dream of everybody to trade and control income from anywhere in the world.

With the availability of many financial markets to trade, you can trade everything from pork belly futures to Apple stock options! forex trading is a big opportunity to many people around the world, thus it has grown in popularity amongst traders’ worldwide. However, before you throw any of your hard-earned cash in trading Forex, it is important you know the importance of regulation in Forex trading and safety as an avenue of investment.

Before Forex trading was like the black market. There was virtually no laws, no rules, nothing. It was basically just the sellers doing business with the customers and through brokers and the banks. Those who hate -rules would prefer doing during that time. Nevertheless, those days are past days. Forex regulation was brought and it’s here to stay.

In this article, we shall help you inform why it was not only necessary but also important to regulate Forex trade. To grasp the advantages of regulations you need to first know how regulation is done.

Forex trade regulation

One of the facts about forex trading is that it has now become the largest financial market all over the world. It’s also decentralized in nature, what made it difficult to regulate in the in past years.

However, the issue of unscrupulous characters in the Forex market has made regulators to tighten their grip on banks and Forex brokers. Essentially, Forex regulations are made by the same organizations that supervise financial banks and companies trading in the finance market. Most of the regulators deal with trading done in their countries.

The Importance of Regulation in Forex Trading

Promoting ethical and fair behavior

Before, hoodwinking cases in Forex trade were quite rampant. Now and then, several people lost their money due to the selfishness and greed of different participants in the market.

Forex regulations have made it hard for such behavior to happen again. Every player has to operate under the strict guidelines and rules. However, there is the possibility of some people being dishonest. They take advantage of jurisdictions which lack real oversight.

If you are the client, you should be watchful to make sure the players you are doing business with do not have bad motives which might finally cost you a lot of money. It is advisable you to operate in countries that enforce trading guidelines seriously.

Client protection

Protecting clients is another advantage of forex trade regulations, it’s make sure clients are cushioned. Regulators set rules for brokers to have protection for themselves and the clients they do business with. Strategies used in protection should be updated often to deal with emerging risks in Forex business.

Therefore, with regulation, interests of the client are safeguarded while securing their investment since there is compensation in case of bankruptcy.

Reducing fraud

Foremost, you should know that the forex market is very volatile and dynamic in nature. Therefore, you need to get adequate training on how to place trades in the market. After receiving the necessary training, you should practice what you have learned for some time in a demo account. Doing this will help you to achieve consistency and keep emotions at bay.

Establishment of Forex trade regulators has brought a platform in where cases of theft in Forex trading are dealt with effectively. Scammers are most are found in form of misrepresentation, Ponzi schemes, through boiler room’ tactics and churning of customer accounts.

Regulators have a greater role to deal with practicing illegal action by following legit channels as stipulated by the acts that authorize them. The only problem here is that individual regulators are capable of dealing with cases occurring under their jurisdictions.

Nevertheless, through efforts, there has been a significant decrease of shamming this behavior where Forex regulators have been enforcing the rules they set seriously.

Next, you should know that forex is not a scam. Forex trading is one of the legitimate ways of making money in the internet. Nonetheless, you should always be on the lookout for fraudsters who may fleece you of your funds. You should ascertain the authenticity of the broker you prefer to use for trading.

There are several regulating agencies that look for fraudsters in the forex market. An example is the Securities and Exchange Commission (SEC). Before opening a trading account, you should check whether your preferred broker has been cleared by these regulating agencies.


With the power to revoke or issue licenses has assisted clients when it comes to searching for legit banks and forex brokers. In order to know if you are trading with a fake player, just research for their names in the regulators list, the list is often updated. You can also ask for their license number to confirm licensing with the regulators to know if you are safe to do business.

Forex regulation has made Forex trading easy to managing

Some people question the possibility of making money in the business of trading currencies. The truth is that Forex regulation has made Forex trading as easy as managing a delicious snack from McDonald. Many people have harvested huge returns in this business.

The secret of success in Forex trading is to develop unemotional detachment from the money and keep to your strategy at all times. Those who lose enter the business after they have only known the definition of the word “pips” and they fail to commit themselves to learn how the Forex market operates.

Forex trade regulation is valuable in everything that people do. Rule and guidelines assist in setting limits hence preventing individuals from slipping into extremes. The same way government laws are often broken, so is Forex trade regulations set to govern Forex trading.

These rules don’t apply internationally which has made big players in the Forex industry to keep manipulating the system. It’s a client role to safeguard them from being conned.

In conclusion, forex trading is a very secure investment avenue for all types of investors. If you follow the rules of the business, you will definitely make some good cash. However, if you want to be lazy, you may find things hard.


Leave a Comment