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Is it safe to trust online brokers?

Being concerned about the trustworthiness of brokers is a useful frame of mind to have. Since you are, after all, effectively giving your money to the internet it is natural to wonder and investigate where your money goes and whether it is safe.

For the most part, yes, many online brokers can be trusted with your investment, but not all of them. There have been many cases where groups posing as Forex brokers turned out to be scammers who run away with their clients’ accounts. This is why it is important to do a bit of researching before opening a sizeable account anywhere. By reading reviews online and asking for comments from your fellow traders, you can choose a reputable broker and rest easy knowing your money won’t just suddenly disappear.

While the Forex is essentially a decentralized market that is minimally regulated, brokers, on the other hand, have governing bodies that supervise them. These regulators ensure that the Forex brokers in their territory abide to a set of rules to guarantee you receive quality service. In many places, brokers are required by law to register with a regulator before they can open for business. This means you can check if a broker really is an acknowledged member of a regulating body to help you pick which broker to use.

Regulators vary depending on your location. In the United States, the Forex is supervised by the Commodity Futures Trading Committee (CFTC). In Japan and the United Kingdom, the overseeing body is called the Financial Services Authority (FSA). When browsing online for brokers, check if they are included in the official lists of these organizations or their respective country’s regulators.

 

Created by : GeorgieOh
Published : 09 Jun 2014

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