The forex market is the largest and most liquid financial market in the world, making it a pool of both opportunities and risks. When starting a forex trading career, budding investors must learn to work with forex brokers who are both reliable and trustworthy. To make sure of this, one should check their regulations which may be handled by different institutions. One example is the Australian Securities and Investments Commission, or ASIC.
The ASIC is one of the oldest and strictest regulatory bodies in the world of financial trading. Its jurisdiction is mainly focused on Australia and includes guidelines that ensure all aspects of the Australian financial system are working effectively and efficiently. These include financial companies, investors, consumers, and other entities in the financial space. To determine whether or not your forex broker is ASIC regulated, check this article.
ASIC-regulated brokers provide various benefits to budding forex traders that non-regulated brokers don’t. The reason for this is ASIC-regulated brokers are required to meet various requirements and standards to be considered legitimate. Some of which include:
- Having a physical representative office in Australia to keep in contact with traders and other clients.
- A minimum of at least 1 million AUD for capital operations. This ensures that the broker is able to sustain various market conditions without going bankrupt, which can affect their clients.
- The necessity for every broker to be completely transparent about their financial dealings, which include sending regular audit reports.
With these requirements in tow, ASIC-regulated brokers are some of the most honest and genuine brokers in the world. This enables them to provide more benefits to their clients. Some of these benefits include the following:
- Safety guarantees
Each ASIC-regulated broker is required to ensure that their client’s funds are in safe hands by regulating them in separate accounts in the leading brands of Australia. This ensures that no money is dealt on offshore accounts or are mishandled improperly by internal employees or third-party operators.
- No limit on maximum leverage
Unlike other forex brokers, some ASIC-regulated brokers don’t have a limit on how much leverage you can do in regard to your trade. This is a great advantage to scalpers and traders who like working in a high-risk environment.
- No contradictory rules
Some forex brokers may include rules that contradict each other. For instance, there are brokers that enforce both the first-in, first-out (FIFO) rule and the no hedging rule. The FIFO rule means that investors should close their oldest position first when trading with multiple positions, whereas the no hedging rule states that one should not open multiple positions to reduce risk.
Because both these rules cancel each other out, traders will have limited risk management options and therefore will not be able to reduce their risks effectively. Fortunately, ASIC-regulated brokers don’t require their clients to follow such rules that contradict each other, reducing conflict.
- Updated system
ASIC-regulated brokers are required to stay updated when it comes to providing various trading platforms and resources to their clients. This ensures that they stay on top of their game, which fosters healthy competition from other ASIC-regulated brokers and brokers from around the globe. To prevent further issues, ASIC-regulated brokers are also forbidden from training their clients to prevent conflict of interest. This results in a more stable relationship between the broker and the trader.
- Effective customer service
Most ASIC brokers are considered one of the best in the business simply because they are required to resolve all customer issues as effectively and as immediately as possible. Coupled with transparent transactions and world-class expertise, most ASIC brokers usually make it in the top of the list of the best forex traders of the world.
If you have any complaints regarding an ASIC-regulated broker, consider contacting the ASIC consumer hotline, which deals with all issues, including:
- Other fraudulent activities that could harm an investor
All of these are done anonymously so clients can ensure that their safety isn’t at risk.
How to Choose the Right Broker
There are various ways on how one can choose the right broker. After checking their regulations and other certificates that confirm their legitimacy, budding investors can help narrow their options by doing the following:
- Researching their websites
This involves browsing the broker’s different online platforms, which may include social media sites and online presences of key employees. The reason it’s important to visit their sites is to learn about the company’s history while also comparing features and platforms with other forex brokers. After researching sites, list your options down and compare their pros and cons.
- Reading reviews from customers and other sites
Certain sites provide objective data that helps you weigh in the pros, cons, and features that certain brokers have. They also regularly update their content, which reduces an investor’s need to visit different websites. Nevertheless, it still helps to visit a couple of sites and even read up on personal experiences from other clients. While reviews are subjective, they have an impact on the company’s reputation.
- Reflecting on their current capital
Certain brokers require a big amount of capital. This is because their platforms may have extra features that provide traders more advantages compared with other traders. However, there are other brokers that allow one to open an account with a low deposit fee, which can be a great affordable option. If you’re looking for the most reliable but affordable brokers, make sure to compare their spreads and deposit rates.
Aside from selecting the right forex broker, traders should also include investing in the right platform that enables them to have an advantage when trading in live markets.
Certain forex brokers with regulations tend to have the upper hand compared with nonregulated brokers due to the fact that they are bound by rules that ensure the investor’s safety. This makes ASIC-regulated brokers one of the best forex brokers due to their reputation for being both honest and reliable.