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Unregulated Forex Brokers

Unregulated forex brokers should be avoided at all costs, as the risk of fraud, unfair treatment, or straight-out theft, is sky-high.

In most countries, you need a license and supervision from a local regulator in order to provide services in that country.

But, a brokerage firm can operate in a country where a license is not required or there are no laws in place that regulate the brokerage industry.

In that case, there really are no rules or consequences if the broker decides to play tricks on you.

You are entirely at the mercy of the broker playing fair with you.

Why regulation is important

Regulation is a set of laws that all regulated firms must follow. If not, they will most likely face huge fines or lose their license.

If regulation is required to operate in that certain jurisdiction, then they are out of business without a license and cant operate…

For instance, all regulated brokers in the United Kingdom, must:

  1. Keep all client funds segregated from their own account
  2. Provide negative balance protection for retail clients
  3. Adhere to strict communication rules toward retail clients
  4. Regulation gives access to compensation schemes (FSCS) and an ombudsman service

If a broker treated customers poorly they will face consequences from the regulator.

So, regulation is super important for you to trade safely.

Types of Regulations

Regulators come in different forms, and they are not all the same.

For instance, choosing an offshore broker that is regulated on a small island state, will give you very limited protection (if none).

Some of the best and most authority regulatory bodies in the world are:

  • FCA (United Kingdom)
  • MAS (Singapore)
  • CFTC (USA)
  • ASIC (Australia)
  • BaFin (Germany)

Choosing a broker from one of the jurisdictions above will give you excellent protection.

If you want to use an offshore broker (or unregulated) because they offer higher leverage, then you should consider a reputable well-regulated broker with an offshore entity.


Stay clear from unregulated brokers as the risk of being a victim of fraud is very high and it poses a huge risk for your capital.

Your entire relationship with the broker is entirely based on “faith” which of course is not optimal…

For best protection and peace of mind, choose a forex broker regulated in either the UK, Singapore, USA, Australia, or EU.

If you want higher leverage than what is offered for retail clients in a reputable jurisdiction, you should consider a well-regulated broker that also has an offshore entity.

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