Problem that is often overlooked by beginners is the legality aspect.
In every investment, legality is a crucial issue. The brokerage company will collect funds from the community so that there is need for legality aspect to protect the holders of the fund. It is necessary to address the problem of default or fraud committed by the company.
This is the basis of a regulatory body that will supervise investment companies like this. Forex is a trading futures, which is a derivative investment products of the shares and such. Initially, Index and Commodities are classfied as futures trading. Then the next, classified as part of forex futures trading as well.
In the U.S., regulatory agency for futures trading is the CFTC (Commodity Futures Trading Commission) and NFA (Nation Futures Association). CFTC and NFA can be considered as a model for regulators in other countries. The brokerage company that is under the regulatory rules must follow a strict and rigorous selection Therefore, companies that have certified the CFTC and the NFA can be proud of their membership.
The law prohibits U.S. citizens to invest in the brokerage firm that has no certification CTFC and NFA. Even companies like this also prohibit American citizens to open accounts. So you can imagine how strict the rules are enforced for these future trading. One thing is for sure, never opened an account at a broker that is not under the CFTC or the NFA, this applies to all of you, no matter whether you are an American citizen or not. Do not easily fall on the promises or attractive offers. Certification is everything in this business!
To avoid fraud by brokerage firms forex, there are few things you must consider:
- Be suspicious of any investment scheme that is too good
- Avoid companies that offer high yields on your investment
- Avoid models that offer ZERO RISK investment, there are no such thing!
- Understand the concept of margin trading first before starting in forex trading
- Illegal brokerage firms typically market their products outside US
- Always look for third-party opinion about the company
