Recently I read an article on Reuters about the SEC (Securities and Exchange Commission) warning traders about the risks involved on retail Forex. Amongst other things, they warned about:
- The higher levels of leverage, and
- Fraud/lack of a central clearinghouse (Brokers fraud)
But, is it really riskier than other financial instruments? I don’t think so, and here are the reasons.
Yes, there are some fraudulent Forex brokers who only want your money, they will execute your stop losses even when the market does not reach your SL level, they won’t send you the money you withdrawn from your trading capital, they won’t execute your take profit orders even when the market passed that level, etc. But there is one simple solution to this problem: don’t open an account with a Forex that is not regulated.