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Benefits and Drawbacks of Unregulated Forex Brokers

Written by:

Henry Williams

Edited by:

Henry Williams

Written ON:

Mar, 2021

Updated ON:

Mar, 2021

Table of content

The foreign currency exchange market, or Forex as many call it, is the largest financial market at the moment. In the beginning, when Wall Street began its first trading operations, outsiders could not easily join the traders. There was a membership fee and the existing traders would have to nominate you. Hence, several decades ago, carrying the status of the trader was rather a privilege. Nowadays, on the other hand, trading is easily accessible to anyone across the globe. With the introduction of the internet and highly advanced technology, one can become a trader whereas never leaving home.

Multiple trading platforms, brokers, regulators, and market players emerged since the beginning of the 21st century. For instance, there are more than 3500 Forex brokers in the US that recognize themselves officially as brokerage houses. There is no upper limit to how many brokerage firms can we have in the world, nor the need to restrict their number. However, numerous traders have expressed concern regarding the regulations on the Forex market and the fact that there are way more unregulated brokers than licensed ones. It is not easy to understand the necessity of regulations in any financial market. And we cannot say that all unregulated brokers should be avoided at all costs. Therefore, we prepared the below article to guide you through the benefits and drawbacks of unregulated Forex brokers.

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What does the regulation change?

best forex broker in usaThe regulations in the Forex market, as well as in any other financial sector, are highly complex. There is no single regulatory body that takes care of every broker worldwide. In fact, there are hundreds of different regulatory authorities, some of them even operating in the same country. However, there are some huge establishments responsible for the regulatory framework that are widely accepted and recognized. For instance, ASIC, or Australian Securities and Investments Commission is the best regulatory body in Australia, CFTC or Commodities and Futures Trading Commission serves as the top authority in the United States, and CySEC, Cyprus Securities and Exchange Commission is the most popular choice in Europe. Consequently, you would find the best Forex brokers in USA holding the license from CFTC.

Among many other applicable rules, regulatory bodies carry out inspections on brokerage firms. For instance, a licensed broker with CySEC would have to prepare for the monthly or yearly audit. These audits make sure that the firm is clean and that it complies with all the requirements that the authority states. Most importantly, regulations oblige the licensed to keep separate accounts for their clients and for the company. Meaning that in case of financial hardship of the brokerage house, the clients of the broker will receive their funds no matter how hard the company suffers. Therefore, one of the advantages of regulated Forex brokers is financial security.

However, regulation limits the freedom of the brokers in many ways. For instance, European brokers cannot offer any bonuses or promotions to their clients as the regulatory framework strictly prohibits it. Furthermore, these regulations impose restrictions on the leverage, making it extremely difficult to go for risky trades. While these limitations are for the benefit of the trader, they take away the freedom of choice from them.

How Unregulated Brokers Differ

mt4 brokers usaUnregulated brokers have no one to audit them, restrict them, or prohibit them from doing anything that does not go against the legislation of the residence country. If the company is legally registered within the country and pays the taxes, otherwise, it is free to conduct its business in accordance with its own views. Unregulated brokers have the freedom to decide what kind of promotional package they want to offer to their clients or what spread and leverage work best for them. That is why customers often feel more attracted to the offers presented by unlicensed brokerage firms rather than regulated ones.

However, we should recognize the associated risk with trading on an unregulated platform or with an unregulated broker. It is extremely important to look for the best unregulated Forex brokers in order to avoid any threats. Sadly, in many cases, inexperienced traders will come across the scam broker. Scam brokers will claim all the financial resources of the client immediately after the deposit. And the problem is that there is no official authority that can actually help you to get your money back. To illustrate, most of the unregulated brokers can change their names, addresses, and contact details, even the website, as frequently as they want. Therefore, tracking them is almost impossible. Hence, make sure that you do extensive research on unregulated brokers, go through the reviews on the Forex brokers list, and decide what works best for you.

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Top Forex Brokers List

Again, as we have previously mentioned, research on brokerage firms is the key to avoiding any unnecessary losses. However, such researches are often time and energy-consuming. Thus, in order to save you a great deal of time and effort, we present you with the list of the top Forex brokers available on market. Moreover, you can visit the individual websites of the below brokerages and check the offers that they have for you.

Capital.com

Our rating

5

User rating

5

EagleFX

Our rating

5

User rating

5

AvaTrade

Our rating

5

User rating

5

Plus500

Our rating

5

User rating

5

Recommended

XM Group

Our rating

5

User rating

5

IQ Option

Our rating

5

User rating

5

HotForex

Our rating

5

User rating

5

Exness

Our rating

5

User rating

5

RoboForex

Our rating

4.99

User rating

5

OspreyFX

Our rating

4

User rating

4

Tickmill

Our rating

4

User rating

Best Unregulated Forex Brokers

Based on the reviews, feedback from the clients, and the history of the companies, we can say that the below listed unregulated brokers are indeed trustworthy. So, have a look at the top 4 unregulated Forex brokers that have a considerable history of customer satisfaction and affordable services.

PaxForex

best forex brokers for us clientsTo begin with, the first place holder within our unregulated Forex brokers list is PaxForex. Firstly, Pax Forex is equipped with every benefit that unregulated Forex brokers usually have. Those are high leverage, low spreads, zero commission, and the best trading platforms (such as MetaTrader 4). Additionally, Pax Forex put a lot of effort to enhance the experience of their clients and improve their services. Their primary focus is on customer support. Therefore, the broker has multilanguage support helping over 50 different nations daily. Pax Forex has different types of accounts that vary according to the leverages, minimum deposits, and the level of trading experience/knowledge of the account holder. The brokerage firm supports all popular payment methods, including Visa/Mastercard, Skrill, BankWire, WebMoney, and many more.

AmegaFX

best forex broker us One of the most trusted Forex brokers is AmegaFX. AmegaFX allows trading on all financial markets, not only Forex. The broker is famous for its flexibility in terms of strategy choice from the clients, best aggregated quotes, and incredibly low spreads. The leverage can be up to 1:1000, which is almost impossible to find with any regulated broker. Additionally, the minimum deposit requirement with AmegaFX is 1 USD and there is no upper limit. Furthermore, the special offers provided by the broker are truly unique and promising. There are multiple contests held for the clients of the broker, as well as new bonus programs from time to time. The brokerage also offers both MetaTrader 4 and MetaTrader 5 as their primary trading platforms.

Schatz Markets

best us forex brokerIn brief, we can say that Schatz Markets primary goal is to educate its clients, other than making money, of course. First of all, the website of the broker provides extensive information on market news, guides on how to trade, articles from experts in the field, and so on. Tight spreads, fastest execution of transactions, PAMM account, 24 hours live support on working days, and user-friendly platform. This is the list of characteristics that best describes Schatz Markets broker.  Schatz Markets has a huge potential to become the best unregulated Forex broker available on the global market.

FreshForex

unregulated forex brokersFinally, Fresh Forex has been on market for over 15 years. It still is an unregulated broker meaning that the firm managed to maintain its reputation and customer loyalty without any need for the license. Furthermore, the broker was always famous for its generous deals and offers. It still continues to provide multiple bonus schemes for both new registering users and existing clients. Indeed, the leverage that the broker offers is one of the highest on market – 1:2000. There are no commissions for deposits, spreads start from 0.0 pip, and transaction or operation execution time is incredibly fast, requiring 0.05 seconds. The broker also offers micro-lots as low as 0.01, along with educational materials, a free demo account, and over 130 trading instruments. Consequently, the reputation of Fresh Forex is almost the same as for any of the top Forex brokers in USA.

Bottom Line

In conclusion, the decision on whether to go for a regulated or unregulated broker depends on multiple factors. For the highly experienced or intermediate traders, who look for more freedom in trading strategies we recommend unregulated brokers. You would benefit much more from high leverages and bonuses and promotions. However, that is true given that your chosen broker is legit, with positive reviews and no scam alerts. Once again, the traders should never ignore the importance of the research when dealing with unlicensed brokers. Hence, if the broker seems clean, even without an official license, has a history of active presence on the market and there are no reviews available proving that the broker is a scam, you are free to trade with it. Thus, sometimes, unregulated brokers can offer more benefits to certain traders’ groups than the best regulated Forex broker.

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