safe online brokers

Online trading has become increasingly popular in recent years, made more accessible by easy sign-up processes, low deposits and mobile trading apps. If you’re new to forex trading online, the first and most important step is choosing a safe online broker to trade with.

Trading carries a certain amount of inherent risk, but you shouldn’t have to worry that your broker is likely to run off with your funds, refuse to pay out when you try and withdraw, or charge you extra fees not mentioned on their website before you can access your money. In this article, you’ll learn why it’s so important to only trade with regulated forex brokers and how to find safe, regulated brokers online.

Regulated forex brokers

Here at Forex Fraud, we carry out full investigations into the various forex brokers available, so we can let you know which are the safe forex brokers and which to avoid. Check out a few of our top-rated brokers below.

  • Blackbull– A regulated global forex broker with highly competitive spreads, this broker offers over 50 forex pairs, easy mobile trading and trading via the award-winning MT4 platform. It also has a risk-free demo account.
  • Tickmill– A trusted global forex and CFD brokerage regulated by five different and well-regarded authorities, including the FCA and CySEC, this broker offers excellent trading conditions, a wide range of funding options and a low minimum deposit.
  • Plus500– A fully regulated broker with a strong reputation in the industry and trading community, this firm offers a highly intuitive mobile trading app, along with the opportunity to trade multiple assets, including forex and CFDs.
  • AvaTrade– A globally regulated, award-winning broker with some of the best customer support we’ve found, this broker has a great choice of trading platforms, including MT4. It allows for automated and copy trading and offers over 45 forex pairs.

Why you need to choose a regulated broker

Trading with a regulated broker is important as it will give you peace of mind and allow you to focus fully on your trading activities. Regulated forex brokers are overseen by a national governing body that issues licences, monitors broker activities and deals with any complaints against the broker. The governing body sets out guidelines and is responsible for ensuring that the broker is complying with local and global laws and following best practices within the industry.

Each governing body is different, but all operate in a similar way. Some of the strictest authorities are the Financial Conduct Authority (FCA) in the UK and the Cyprus Securities and Exchange Commission (CySEC), which oversees brokers in EU countries. Even if a broker is regulated, you may find the firm does the bare minimum needed to comply with the governing authority, so always check (or ask) which client protections are in place.

How to find safe forex brokers

It is vital that traders do their own research when choosing a broker. Any broker can claim on their website that they are fully regulated, and even quote a licence number, but some of these brokers are fraudulent and the licence numbers are fake. Don’t be fooled into investing with dubious online trading brokers. It’s important to do your own research and check those licences to ensure you only end up trading with safe, regulated brokers.

It is advisable to go to the regulator that a broker claims to be licensed by and ensure that the broker is listed on the regulator’s site. Check that all the details, including the URL of the site and the contact details, are the same, as some fraudulent brokers will try and use the name and even the logo of an established broker.

Find out if the broker you are considering is a member of the Investment Compensation Fund (ICF). Ask if they offer negative balance protection and secure encryption of your personal data. Truly safe forex brokers keep all client funds segregated in trusted top-tier banks in order to protect clients in the case of their own insolvency.

It is also a good idea to carry out a little more research by reading broker reviews, both in the industry press and from real customers online, to make sure there are no red flags with the broker you are considering using. You can search online to see if the broker has been blacklisted or if there are outstanding complaints against them.

Who regulates forex brokers?

Each country or region has its own regulators that oversee the financial industry in that country, including brokers that provide online trading. The main regulators for forex brokers include:

  • Australian Securities and Investment Commission (ASIC) in Australia
  • Cyprus Securities and Exchange Commission (CySEC) in Cyprus
  • Federal Financial Supervisory Authority (BaFin) in Germany
  • Malta Financial Services Authority (FSA) in Malta
  • Financial Markets Authority (FMA) in New Zealand
  • Seychelles Financial Services Authority (FSA) in Seychelles
  • Monetary Authority of Singapore (MAS) in Singapore
  • Swiss Bankers Association (SBA) in Switzerland
  • The Financial Conduct Authority (FCA) in the UK
  • Financial Industry Regulatory Authority (FINRA) in the US

In the US, many states also have regulatory bodies that oversee financial activities within the state and can handle complaints against brokers within state borders.

Remember that some regulators are stricter than others. Choosing a regulated broker is the first step. Then, you should do your research to ensure that the broker offers all the client protections that really matter to you.

In short, you want to carry out as much research as possible to ensure that the brokers you are considering are safe, licensed and regulated in all the jurisdictions they operate in, and in particular in the country that you reside in. If you have to make a complaint against a broker, it will be easier if you can approach a governing body in your own country that speaks your language. In addition to double checking that the broker is regulated, find out about all the client protection measures they offer, such as investor compensation, negative balance protection and data encryption. Forex trading is risky. Make sure you minimise the risk by only trading with safe, reputable and fully regulated brokers.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.