Who regulates the forex market prices?
- Thread starter sab1234
- Start date
Yes - slightly. (Shouldn't be "hugely", at least in theory.)
But be aware that when you "trade" against a counterparty "broker", it isn't really a broker in the sense the word's normally used. No currencies really change hands when you "trade" with them: all you're doing is betting with them about the price movements. And be aware that they hold your funds and have their own pricing for their own "products", and they make up all the rules and decide how to interpret them, too.
Unless you have enough funds to trade with a genuine, direct-access brokerage in the interbank market (they execute trades on your behalf in exchange for a commission, and they have no incentive for you to lose, because they're not directly financially involved, themselves, in the outcomes of your trades).
That said, there are "dreadful" and "not-so-dreadful" spot forex counterparty "brokers" available.
Where, how and by whom they're regulated is very important.
For example if you're in the UK and use an FCA-regulated brokerage, at least the chances of outright fraud and losing your whole account that way are very limited, and you have a government-backed protection guarantee if they disappear with your money.
But in general, you're right to be concerned, and to be very careful.
Always check their regulatory record as well - not just "by whom they're regulated". There are some very big, very well-known "brokerages" who have been fined multiple millions by multiple different regulators on multiple occasions in multiple countries, for as many years back as you look, and show no signs at all of changing their behavior.
There, fixed it for you to help with the flow...
Lol, thank you ... maybe I should just have said "You might be wise to stay away from FXCM" instead of all that repetition?
Lol, thank you ... maybe I should just have said "You might be wise to stay away from FXCM" instead of all that repetition?
Sure, but it has multiple letters though.
Don't we all? I even have some after my name, and some more lying around somewhere that I haven't replied to for months ...
You refer there to two different problems.
"Difficulties being paid out" apply mostly to "brokerages" that are either unregulated, or have chosen to be regulated in places like Cyprus or the Caribbean (that's for their own protection, not for that of their customers).
"Manipulating the prices" is a different matter, and it can happen.
What matters is how they deal with situations arising "when something goes wrong". When nothing goes wrong, everyone's "good".
If you want a recommendation, in my opinion it's difficult to do much better than a company called Oanda. Their spreads are not always quite the best (though they're also not bad, overall) but they're certainly honest and ethical, as counterparties go. Not everyone will agree with me, perhaps (nothing new there) but I really think it won't be easy to find a better/safer one, overall. Just my own perspective. I had an account with them for 4 years (some years ago) and was happy with them.
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No there is NO central exchanges for Spot Forex prices although they are regulated by various regulatory bodies in various countries. There is an central exchange for Forex futures but not for Spot. Spot Forex is traded on OTC (over-the-counter) market meaning that the prices is determined by negotiations between buyers and sellers, no different from haggling in the market. And yes, Spot Forex prices ARE different from one broker to another.