What is forex trading? 3 Reasons why it needs to be regulated by authorities

What is Forex Trading? As a seasoned trader, the answer to this question is no longer new and amusing to you. However we encourage you to join us as we revisit its definition and an avenue to fully understand today’s topic. Foreign exchange or forex is a field where people, particularly the investors and traders, sell and purchase currencies  in order to earn money. Everybody who is involved in this field is geared towards obtaining an increased profit every single day so they work so hard to discover and apply trading strategies which they believe are effective. Because of technology, the chances of increasing your earnings has become limitless as markets are open 24 hours a day and 7 days a week. Thus, we can therefore say that currency exchange is a highly volatile yet “decentralized market” where rates are defined by the client and the trader based on the law of supply and demand. You read it right, the forex market is decentralized so it means that there is no absolute regulating body to protect you. Though there are brokerage firms who claim that they have their own groups and regulating bodies to ensure your safety, statistics tells us that a minimum of 5% in the brokerage population is regulated. Thus, we can also say that one of the risks to consider in forex trading is the absence of an absolute regulating body to protect every trader. Is there something that we can do? As a trader, one thing that we can surely do is to wish for the best regulating bodies to be established and to look after the fairness and safety of every fx transaction. Here are the specific reasons why forex needs to be regulated.

  1. E-trading brokers continuously increases

The total population of e traders and brokers continuously increases as the days pass by. This is supposey a good news but behind this milestone also lies more threat for scam,overpricing and other potential problems if there is no definite authority to screen these companies.

  1. To solve ethical issues

Part of keeping both parties secured, a regulating body is also something which is expected to go in between a misunderstanding between a client and a broker. Thus, they are authorized personnel who can help make sure that each of the agreeing parties are both capable of doing their part in a certain transaction by helping them understand a contract.

  1. To provide information

As an authorized group, a regulating body can also serve as a legit source of information for updates, warnings and other announcements pertaining to the business.


So “What is Forex Trading? ” The answer to this question will always be the same as days pass by but with the clamour for an umbrella regulating body for this field of business, there is a certainty that risks regarding currency trade will be lesser with the establishment of a general authority to look after the welfare of everyone around the globe.


Shanto is a professional blogger. He love to write about all latest topics. He is working as an seo expert from last 8 years.

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