To have a clear understanding of what Forex brokers do (and should do) it’s important to know a bit about an organisation called the Financial Conduct Authority (FCA) in the UK. Anyone reading the full name of the FCA will gather immediately this group is charged with oversight on how financial transactions are conducted. Clearly, financial markets must operate in an honest and effective manner, so consumers receive a fair deal each time a transaction is made.
The FCA endeavours to make the markets work well by regulating more than 56,000 businesses in this essential industry. This oversight task includes guidelines and regulations for FCA UK forex brokers. The protection provided to consumers includes protecting the integrity of UK financial markets and promoting effective competition, in the interest of the consumer.
In recent years, the currency market has become more decentralized, meaning orders are increasingly traded and processed online, using electronic communications. Individuals open an account with a broker using a forex trading platform. The challenge is to find a firm or broker with whom you can work efficiently and with the necessary peace of mind. Fortunately, guidance in this area is available in several places, including from public entities such as the FCA.
Individuals acting as brokers in the special area of foreign exchange (forex) engage in buying, selling and exchanging currencies at a current price or at prices to be determined. Currently, the forex market is the largest, by trading volume, in the world. This market sets the current market price of one currency in relation to another. As mentioned, it is essential to work with the right broker when you are active in this massive and aggressive market.
Details you should consider when searching for your forex broker include the minimum deposit you’ll need for an account and factors such as spread and leverage for each firm or individual being considered. It’s also crucial to see how the broker you’re considering is being regulated or supervised, such as by the FCA. You may find such firms and trading houses as HYCM, FXOpen, OctaFX, and DXM at or near the top of the lists for recommended firms, based on the elements mentioned.
You’ll need to determine if the company you want to work with on a forex trading platform has adequate capitalisation. You should also determine the types of accounts offered, how much leverage or margin is offered, and what kind of spreads are provided. One of the key factors you should determine is the commissions or fees you’ll be responsible for when you execute a trade. You should also be
comfortable with the currency options available for transferring funds and the payment methods offered.
Engaging in foreign exchange trading can be tempting and may seem quite exciting, but unless you’re a veteran you should exercise caution when deciding which house to work with and how much you’re willing to commit to the exercise. Be sure to gather information from the FCA site, the top news sites in the industry, and from the broker’s own site, before you make any financial decision.