As there are more and more traders, the supply of brokers has also increased considerably, and there are more and more brokers. With so many different brokers, some of these are simply not worth investing our money. ➡️ Then, How does What does a trader do to select a good broker? It is likely that with so much offer, you do not know which broker to select.
Well, one of the most important points, one of the things you should definitely look at in order not to have problems when investing, or more likely, after investing with this type of company is whether or not the broker is regulated. To avoid this type of problem, and many others, we must select one with these characteristics.
✅ Nor should you confuse that a broker is licensed, that it is regulated ⛔. We will try to explain this in the simplest way possible. A regulated broker is headquartered and controlled by the regulator of the place where the broker is resident. But nothing prevents it from operating in other countries. Let's say that there is a broker in Germany, regulated by the due German regulatory body, after completing the due procedures, it will be authorized to operate in different European countries, such as Spain.
The problem is that if I have a problem with the broker and I am in Spain, I still have to claim it before the German regulatory body. Taking this into account, the best option would be to operate with a broker regulated by a regulatory body in the country where we reside. If we are in Spain, then look for a broker regulated by the Spanish CNMV.
We always recommend trading with properly regulated brokers, which in theory means ruling out those in Cyprus, Vanuatu, British Virgin Islands, and any small island or country that is a tax haven or that you didn't even know existed.
➡️ Why choose a regulated broker?
A regulated broker is one that is under the supervision of a legitimate regulatory body. These types of organizations, or entities, whatever one wants to call them, serve precisely to prevent the broker from exploiting the trader, to avoid abusive practices, avoid fraud and deception, and in general to protect the client. In general, the broker is more controlled, and its quality and practices are controlled.
⛔ Regulated brokers must follow practices regulated by regulatory bodies. ⚠️ The unregulated, should not follow any practice, in case they do not want to follow it. ⛔
If the broker is not regulated, we recommend you, at least, think twice before investing with this broker.
➡️ How can I know if a broker is regulated?
To know if a broker is or is regulated, it is easy, usually a broker, on its website shows if it is regulated, it usually shows it in a showy way, since it is something well seen in the broker market, it gives a certain guarantee and legitimacy. If you cannot find it on the main page, you can look for sections on the web such as, “about us”, “why to invest with this broker”, “regulation”, “security of funds” or sections similar to these.
It is also normal for the broker to provide the registration number, so that one can search and see if it is really regulated or not. If you can't find it in this section, because usually brokers have a chat, or contact section, ask them.
⛔ The lack of this type of information on their websites is a sign that IT IS NOT REGULATED ⛔, Since, as we mentioned before, a broker is usually “proud” of its regulation, since it differentiates it from unregulated brokers, and makes the broker at a higher level than an unregulated broker, the regulation of a broker provides certain security to the broker's clients.
Some of the most popular regulators are: FCA (Financial Conduct Authority, UK), BaFin (German regulator), FINMA (Swiss regulator), FMA (Austrian regulator), ASIC (Australian Securities and Investments Commission in Australia) and SEC (Securities and Exchange Commission , in the United States), CNMV (Spain), CONSOB (Italy), CMVM (Portugal), to name a few regulators.
Not sure about a regulator or your broker's security? Do you think it could be a scam? Leave us a comment explaining your question or problem. We will reply to you as soon as possible!