Can we trust a broker based on regulation

Discussion in 'General Forex Discussion' started by Emibluz, Jan 7, 2014.

  1. Fxpipper

    Fxpipper Master Trader

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    Hedge funds and a few brokers do segregate funds, and insure the same..of course, not everyone does follow this to the letter which is why every trader, when not sure needs to ask their broker these queries and if required, do the research. And remember, despite a broker ranking high on the trust scale, at the end of the day, a broker is still a broker - translated, there's always a certain inherent risk when it comes to online trading.
     
  2. Adam Jackson

    Adam Jackson Trader

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    The Forex industry is quite large and full of dozens of brokers looking to help you trade. A large number of brokers is a good thing for the traders, but it is also a good thing for scam artists and scam brokers looking to swindle new and experienced traders alike. Often times these traders have well hidden within the forest that the Forex industry is. So much so, that you cannot blame people for sometimes being caught in the scam.
     
  3. abi211gail

    abi211gail Trader

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    to avoid those scams, Checking regulations is like the first step you do when choosing a broker to trade with. and you should probably choose those who runs over decades. or maybe even talk to someone about their trading experiences like withdrawal policies and commission fees.
     
  4. momo3HC

    momo3HC Active Trader

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    Regulated or Unregulated? That`s the question. Let me say you something. From what I have experienced, there is a lot to be said about both, however, excuse my biased ass, but I am an advocate for unregulated brokers as I feel there are more advantages for the clients trading via an unregulated broker compared to regulated brokers.

    My reasoning:

    Becoming regulated, for the broker as a company is a very expensive thing to do, therefore they look at recuperating those funds back in, VIA their clients. SO, what they tend to do, is bump up the client costs through widening the spread, offering lower leverage, and bumping up the trade commission charge per trade that gets placed.

    UNregualted brokers on the other hand, do not have this grand expense, therefore they make money via alternative ways, but allow the clients a little more freedom for example by offering a higher leverage- which I myself find to be more useful and beneficial to my style of trading, better spreads and lower trade commissions.

    Also I want to remind you the cases of so called Regulated brokers like JP markets or Pepperstone. Whats the conclusion? Theres no insurance with Regulated ones so I prefer to test and then use even Unregulated broker which gives me good trading conditions and experience at all.
     
    Glastonburyk likes this.
  5. Enivid

    Enivid Administrator Staff Member

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    This is not a way to 'bump up the client costs' for regulated brokers. They have to comply with regulatory restrictions and that's why they cannot offer high leverage. In fact, offering a higher leverage would be a proper way to increase broker's earnings as this would allow their traders to open more (or bigger) trades.

    What happened to them?
     
  6. georgequayle

    georgequayle Trader

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    I've used a couple of non regulated brokers in my time and they've turned out better
     
  7. DT77

    DT77 Trader

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    Some regulated brokers are bad and on the flip side some unregulated brokers are good. You just have to do your homework...
     
  8. TJ Forex

    TJ Forex Trader

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    Just because somewhere is regulated doesn't mean they are trust worthy, it simply means they paid for the license.
     
  9. Enivid

    Enivid Administrator Staff Member

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    Depends on the jurisdiction, but for the most developed countries' regulators, it is by far not just a matter of paying for the license - from proving to the regulator that the management and staff is proficient enough, to being regularly audited, to providing certain trading conditions and disclaimers about the service.
     
  10. pippin

    pippin Newbie

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    I think it is impossible to find unregulated broker which will perform better than regulated ones. Their sole purpose of business is run away with clients' money, sooner or later, absence of the license will just make it easier.
     
  11. walpants

    walpants Trader

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    i wouldnt trust a broker on regulation alone, my biggest thing when looking for a broker is reputation because a bad broker will very quickly get a bad reputation
     
  12. Glastonburyk

    Glastonburyk Trader

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    Couldn’t have said this better, I left regulation behind a long time ago and have always made sure to backrest my unregulated brokers
     
    momo3HC likes this.
  13. Enivid

    Enivid Administrator Staff Member

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    How exactly do you "backrest my unregulated brokers"?
     
  14. DT77

    DT77 Trader

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    It's not impossible at all. My unregulated broker performs better than any regulated broker for me because they allow higher leverage which is exactly what I want. Regulated brokers simply cannot provide this for me as they are shackled by their regulating authority.
     
    momo3HC likes this.
  15. DT77

    DT77 Trader

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    Also, to say all unregulated brokers are going to run away with clients money is way off the mark. There are loads of them that have been operating for years with many happy customers.
     
    momo3HC likes this.
  16. momo3HC

    momo3HC Active Trader

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    Really think it`s impossible?o_O
     
  17. momo3HC

    momo3HC Active Trader

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    Check the web and you`ll see. It`s a long story.
     
  18. Enivid

    Enivid Administrator Staff Member

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    The only noteworthy thing I found about JP Markets is that they got their FSCA license suspended for a few days in March. I failed to find anything of interest about Pepperstone. So what are their long stories you are referring to?
     
  19. DT77

    DT77 Trader

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    Pepperstone almost booted every non Australian customers out with very little notice that they were going to do it. They then had a change of heart after their foreign customers voiced their displeasure
     
  20. Enivid

    Enivid Administrator Staff Member

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    That doesn't seem like a big issue - they would surely return all the customers' funds they held.
     

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